Union Pacific Reports Record Second Quarter

OMAHA, Neb. — Union Pacific Corp. reported 2011 second quarter net income of $785 million, or $1.59 per diluted share, compared to $711 million, or $1.40 per diluted share, in the second quarter 2010.

“Union Pacific achieved another strong quarter, delivering best-ever quarterly earnings,” said Jim Young, Union Pacific chairman and chief executive officer.  “We saw the benefits of our diverse franchise, with volume growth in five of our six commodity groups.  We generated record second quarter operating income and cash from operations despite the impact of severe flooding in the Midwest.”

Second Quarter Summary

Second quarter business volumes, as measured by total revenue carloads, grew 3 percent versus 2010.  Five of Union Pacific’s six business groups reported volume growth, with strong growth in shipments of agricultural products and chemicals.  Intermodal volumes were down slightly during the quarter compared to 2010.  Quarterly operating revenue increased 16 percent in the second quarter 2011 to $4.9 billion versus $4.2 billion in the second quarter 2010.  In addition:

  • Each of Union Pacific’s six business groups reported freight revenue growth in the second quarter.  Increased fuel cost recoveries, core pricing gains, and volume growth contributed to these increases.
  • Quarterly diesel fuel prices increased 44 percent from an average of $2.29 per gallon in the second quarter 2010 to an average of$3.29 per gallon in the second quarter 2011.
  • Union Pacific’s operating ratio of 71.3 percent was 1.9 points worse than the previous second-quarter record set in 2010.  The impact of higher fuel prices negatively impacted operating ratio and earnings by 2.0 points and $0.02 per diluted share compared to 2010.
  • Flood-related issues increased operating expenses by $14 million, or $0.02 per diluted share and resulted in missed coal revenue of approximately $20 million, or $0.02 per diluted share net of estimated cost savings.
  • The Customer Satisfaction Index of 92 set a new all-time quarterly best record, three points better than the second quarter 2010.
  • Quarterly train speed, as reported to the Association of American Railroads, was 26.1 mph, decreasing one percent compared to the second quarter 2010.
  • The Company repurchased 3.6 million shares in the second quarter 2011 at an average share price of $100.75 and an aggregate cost of approximately $360 million.

Summary of Second Quarter Freight Revenues

  • Agricultural up 22 percent
  • Chemicals up 19 percent
  • Industrial Products up 16 percent
  • Energy up 14 percent
  • Automotive up 14 percent
  • Intermodal up 13 percent

2011 Outlook

“Looking to the second half of the year, we expect stronger performance despite some economic uncertainties and ongoing flood challenges,” said Young.  “With our diverse franchise and strong value proposition, we’re well-positioned to leverage volume growth and achieve pricing gains that will improve financial returns for our shareholders.”