OMAHA, Neb. (AP) — Union Pacific Corp. hauled in 29 percent more second-quarter profit as the railroad handled 4 percent more shipments, but the results might have been better if not for some operational challenges.
The Omaha, Nebraska-based company said Thursday it earned $1.51 billion net income, or $1.98 per share. That’s up from $1.17 billion, or $1.45 per share, a year ago.
The results exceeded the $1.94 per share that the analysts surveyed by Zacks Investment Research expected.
Union Pacific CEO Lance Fritz said the railroad’s performance was hurt by shortages of train crews and a tunnel collapse in Oregon that added roughly $65 million in expenses. It is working on improving its operations, he said.
The railroad had to reroute roughly 20 trains a day for more than three weeks on a busy corridor in the Pacific Northwest. The detour added four or five days to the transit time for many shipments and forced Union Pacific to use more locomotives and crews.
“Overall, I am pleased with the effort put forth by the entire Union Pacific team; however, I recognize the results could have been better,” Fritz said.
Edward Jones analyst Dan Sherman said Union Pacific is doing a nice job of improving productivity while handling increasing volume. But the improvement was masked by some of this quarter’s challenges.
The railroad’s revenue grew 8 percent to $5.67 billion in the period. That surpassed the $5.6 billion analysts expected.
But Union Pacific’s expenses increased 10 percent to $3.6 billion as fuel costs jumped 48 percent to $643 million.
Fritz said he expects the economy to remain strong through the rest of the year.
But the way President Donald Trump is trying to resolve trade disputes with some of the United States’ biggest trading partners and renegotiate the North American Free Trade Agreement remains a concern, he said.
“We do have to fix the trading playing field ... I think there are actors — China definitely being one — that have leveraged the WTO and are not trading equitable and fairly. And we do have to modernize NAFTA, but I think the way we are going about it right now with tariffs and the retaliatory tariffs that we’re experiencing — those will be bad for us in the long run,” Fritz said.
Union Pacific shares have increased slightly about 5 percent since the beginning of the year, while the Standard & Poor’s 500 index has increased slightly more than 5 percent. The stock has risen about 30 percent in the last 12 months.
The railroad operates 32,400 miles of track in 23 states.