Increased rates allow Union Pacific to gain despite fewer carloads

OMAHA, Neb. - Union Pacific Corp. said Thursday that rate increases helped lift its second-quarter profit by 10 percent, even though the number of carloads the railroad hauled slipped by 1 percent.

The Omaha, Neb.-based railroad said Thursday that it generated $1.11 billion in net income, or $2.37 per share, in the quarter that ended June 30. That’s up from $1 billion, or $2.10 per share, in the same months last year.

Revenue rose 5 percent, to $5.47 billion.

Analysts surveyed by FactSet predicted Union Pacific would report earnings of $2.35 per share on $5.5 billion in revenue.

Union Pacific Chief Executive Officer Jack Koraleski remains cautious about the railroad’s prospects, as he said the economy seemed weaker in the second quarter than it did at the beginning of the year.

“As we move into the second half of the year, the economic outlook remains uncertain, but we’re hopeful that we’ll see some economic improvement in the months ahead,” Koraleski said.

Union Pacific shares rose $1.68 to close Thursday at $161.36.

Edward Jones analyst Logan Purk said Union Pacific’s results looked good overall, but shipping volume was a little weaker than expected.

Purk still expects Union Pacific to do well in the long term as the economy continues improving, but company officials didn’t offer much to excite investors in the short term.

“Their guidance was somewhat vague,” Purk said.

Coal volumes were roughly even with last year’s weak levels, suggesting that demand may have bottomed out. Over the past two years, many utilities have cut back on coal purchases because of relatively cheap natural-gas prices.

The railroad reported stronger revenue in every area except agricultural products and intermodal containers.

Union Pacific said the volume of intermodal containers imported off ships fell 8 percent in the quarter as activity at West Coast ports slowed. The number of containers moved off trucks to the railroad increased 3 percent.

Union Pacific said revenue improved 12 percent in its automotive, chemical and coal businesses, and industrial products revenue grew 7 percent.

Union Pacific operates 32,400 miles of track in 23 states from the Midwest to the West and Gulf coasts. The railroad says it has 2,792 employees in Arkansas with an annual payroll of $222.3 million. Union Pacific maintains 1,327 miles of track in the state.