Union Pacific Reports Record Third Quarter Earnings

OMAHA, Neb. — Union Pacific Corporation (NYSE: UNP) today reported third quarter 2007 net income of $532 million or $2.00 per diluted share, compared to $420 million, or $1.54 per diluted share in the same quarter last year. Operating income during the third quarter 2007 was $1.0 billion, up from $752 million reported in the third quarter of 2006.

“Our third quarter performance was driven by strong results on both sides of the earnings equation, setting volume and revenue records while at the same time improving safety and productivity,” said Jim Young, Chairman and Chief Executive Officer. “I’m particularly pleased that our operating initiatives, along with the capital investments we are making for growth and efficiency, enabled us to improve customer service in the face of record volume.”

2007 Third Quarter Summary

Operating revenue set an all-time quarterly record, growing 5 percent to $4.2 billion compared to $4.0 billion in the third quarter 2006. Three business teams, Chemicals, Energy and Intermodal, achieved all-time record revenue in the third quarter 2007.

Operating ratio improved 5.1 points versus the third quarter 2006 to 76 percent. The Company’s ongoing safety performance improvement was recognized in a periodic actuarial study, driving a $47 million casualty expense reduction ($29 million after tax). This contributed 1.1 points to the operating ratio improvement.

An Illinois tax law change during the third quarter 2007 resulted in a non-cash after tax reduction to earnings of $27 million. This change will increase our future Illinois income taxes.

The Company’s third quarter 2007 fuel consumption rate, as measured by gallons per thousand gross ton-miles, was a best-ever quarterly rate of 1.22 versus 1.26 in the third quarter 2006.

While quarterly carload volume grew 1 percent, average terminal dwell, as reported to the Association of American Railroads, improved 4 percent year-over-year to 25.2 hours and average third quarter train speed improved slightly to 21.5 mph from 21.3 mph in 2006.

The Company repurchased more than 4.5 million common shares at an average share price of $115.93 in the third quarter of 2007. Year-to-date purchases total 10.2 million common shares or 51 percent of the 20 million share repurchase program.

Third Quarter Railroad Commodity Revenue Summary versus 2006

  • Agricultural up 12 percent
  • Chemicals up 9 percent
  • Energy up 8 percent
  • Automotive up 7 percent
  • Intermodal up 3 percent
  • Industrial Products down 4 percent

Looking Forward

“Near-term, we remain cautious on the economy and see challenges from rapidly increasing diesel fuel prices,” Young said. “However, we are confident regarding Union Pacific’s opportunities to further improve returns through profitable revenue growth and greater productivity. I believe our future is bright because of the men and women of Union Pacific who are dedicated to working safely to improve customer service and shareholder value.”

— Special to Railfanning.org News Wire