Union Pacific Corp, the No. 1 U.S. railroad, reported record quarterl, topping Wall Street expectations, as business volumes and freight revenue surged amid an improving economy.
Union Pacific Chairman Jim Young said the pace of the economic recovery was still uncertain but the railroad was planning to handle continued volume growth throughout the remainder of 2010 and into 2011.
“We still have significant upside. Although there is still uncertainty around the state of the economic recovery, we are encouraged by the current demand levels and see the potential for slow steady growth in the months ahead,” Young said.
Union Pacific officials said they foresee extending train lengths, and said hiring is likely to pick up in the fourth quarter and first part of next year. The acceleration of hiring will depend on the strength of the economy, they said.
Consumer confidence is still seen lacking and there are lags in some industrial sectors, the officials said, citing housing and overall construction as examples of weak spots. But generally they said they expect at least slow improvement.
Quarterly operating revenue increased 27 percent to $4.2 billion.
Business volumes, as measured by total revenue carloads, grew 18 percent from recession-impacted levels a year earlier. The company said the volume growth was seen in all six of its business groups—the first time in six years that it has seen across-the-board volume strength.
Freight revenue for all six business groups also rose in the quarter, gaining 27 percent over 2009 levels, due to the volume growth, core pricing gains of around 5 percent, and increased fuel cost recoveries.
The company improved its operating ratio in the quarter to a record 69.4 percent, an 8 point improvement over a year earlier.
The company said its automotive group freight revenue doubled in the second quarter; intermodal was up 35 percent; industrial products rose 30 percent; chemicals climbed 19 percent; and energy and agricultural freight revenue was up 17 percent and 13 percent, respectively. (Reuters)