Ocean Carrier Review
Pacific Northwest Ports
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UP reports 4/Q earnings
2005 Highlights—revenue growth and improved efficiencyOn January 19, Union Pacific Corporation reported 2005 fourth quarter net income of $296 million, or $1.10 per diluted share, compared to $79 million, or $0.30 per diluted share in the fourth quarter of 2004. The 2004 results include the impact of a non-cash charge for unasserted asbestos claims of $154 million after-tax, or $0.58 per diluted share. Excluding the asbestos charge, 2005 fourth quarter diluted earnings per share increased by 25%.
‘Union Pacific is operating more efficiently, allowing us to handle record volumes and recover more rapidly from challenges such as hurricanes, the Kansas washouts and severe winter storms,’ said Jim Young, President and Chief Executive Officer. ‘We have gained traction throughout the year with our operating initiatives. I am particularly pleased that we converted strong revenue growth into a significant increase in operating income.’
2005 Fourth Quarter Summary
In the fourth quarter of 2005, Union Pacific Corporation reported operating income of $533 million compared to 2004’s $451 million, which excludes the $247 million pre-tax, non-cash asbestos charge.
The Railroad’s commodity revenue was up 13% to a quarterly best $3.5 billion, with all commodities posting increases for the quarter. The main component of the growth was an 11% increase in average revenue per car (ARC), which reached an all-time record of $1,428 per car in the fourth quarter. Growth in ARC can be attributed to fuel cost recovery under the Company’s surcharge programs and yield improvements.
Business volumes, as measured by total carloads, grew one percent to a fourth quarter record 2.4 million.
Operating margin improved to 14.7% versus 14% in 2004. The 2004 fourth quarter results exclude the impact of the non-cash asbestos charge. Including the charge, the reported fourth quarter 2004 operating margin was 6.3%.
The Railroad’s average quarterly fuel price including transportation and taxes was $2.08 compared to $1.46 per gallon in 2004, a 42% increase.
Quarterly average train speed, as reported to the Association of American Railroads, was 20.5 mph, the same as the fourth quarter of 2004. Quarterly terminal dwell time improved four percent to 29.8 hours versus 31.2 hours reported in the fourth quarter of 2004.
Fourth Quarter Commodity Revenue Summary versus 2004
Industrial Products up 19%
Agricultural up 18%
Intermodal up 14%
Automotive up eight percent
Chemicals and Energy each up six percent
2005 Full Year Summary
Full year 2005 net income was $1.0 billion or $3.85 per diluted share, versus $604 million, or $2.30 per diluted share in 2004. The 2005 full year results include a non-cash income tax expense reduction of $118 million after-tax, or $.44 per diluted share. The 2004 full year results include the impact of the non-cash asbestos charge. The comparison of 2005 and 2004 earnings, excluding the tax and asbestos items, would be $3.41 per diluted share versus $2.89 per diluted share, an 18 percent increase.
Railroad commodity revenue totaled a record $13.0 billion, an 11% increase. The main driver of this growth was a $122 increase in ARC to a record $1,358 per car. Growth in ARC can be attributed to fuel cost recovery under the Company’s surcharge programs and yield improvements.
Business volumes, as measured by total carloads, increased 1 percent to a record level of 9.5 million.
Operating income was $1.8 billion, a 16% increase from $1.5 billion in 2004, which excluded the non-cash asbestos charge. The reported 2004 operating income was $1.3 billion.
Operating margin improved to 13.2% versus 12.6% in 2004, excluding the non-cash asbestos charge. The reported 2004 full year operating margin was 10.6%.
The Railroad’s average yearly fuel price including transportation and taxes was $1.77 compared to $1.22 per gallon in 2004, a 45% increase.
Average system speed, as reported to the Association of Ame
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