Union Pacific Corp., the largest US railroad, recently reaffirmed its 2005 financial outlook, saying it could see some gains depending on how fast it recovers from January storms that hurt operations on the West Coast.
The company still expects volume growth this year of one to two percent, as well as total sales growth of five to seven percent, Chairman and Chief Executive Dick Davidson said at a Deutsche Bank conference in Florida.
“Clearly, we’re off to a difficult start for the year, but we’re optimistic about our revenue growth prospects,” he told investors. “Of course, that depends somewhat on the ultimate flood impact, but we potentially have got some upside if demand continue strong and as our operations improve.”
The strongest revenue growth this year is seen for the energy (sales up 10 to 12%) and intermodal (up six to eight percent) segments, the company said. It sees industrial up four percent to six percent, auto up two percent to four percent, chemicals up one percent to three percent, and agricultural flat to up two percent.
Union Pacific has struggled with higher fuel prices and service disruptions amid record freight volumes, but executives have voiced optimism about continued shipping demand and pricing power.
The Omaha, Nebraska-based company was hit by January’s West Coast storms. It said last month and reiterated on Thursday it expected first-quarter earnings of 25 cents to 35 cents a share on revenue growth of four to six percent.
Davidson said no new details are available on the cost of the storm recovery. Last month, the company estimated the costs at about $200 million - about half for repairs and the rest due to lost revenue and higher costs.
That estimate, which could halve first-quarter earnings, does not include insurance recovery.
“We’re getting a better handle on things, but we haven’t finalized anything yet,” Davidson said. (Reuters).