OMAHA, Neb. (AP) — Union Pacific delivered 7% growth in its second-quarter profit even though the number of shipments it hauled remained essentially flat because it was able to continue streamlining its operations.
The Omaha, Nebraska, railroad said Thursday that it earned $1.67 billion, or $2.74 per share, in the quarter. That’s up from last year’s $1.57 billion, or $2.57 per share, before CEO Jim Vena took over after a hedge fund pressured Union Pacific to improve its profitability.
“This provides further proof that our strategy to be the best in safety, service, and operational excellence will drive success,” Vena said. “The entire Union Pacific team is energized behind this strategy and wants to win.”
The results topped the prediction for earnings of $2.72 per share from the analysts surveyed by FactSet Research.
Vena said in a letter to employees reflecting on his first year on the job that he’s proud of the way employees have responded to the “challenges that come with operating the largest railroad in North America” and improved service as he expects more and more of them.
“I said from day one I would ask a lot of you, and demand even more from myself,” Vena said.
Union Pacific said its revenue grew 1% to top $6 billion in the quarter as it was able to continue raising its rates enough to offset a steep drop in coal and metals shipments and lower fuel surcharge revenue. That was just behind the $6.05 billion that analysts predicted.
Coal shipments that have been steadily declining for years were down 22% in the quarter and metals shipments fell off 12%, but overall volume was up slightly and Union Pacific was able to continue increasing the average maximum length of its trains 2% to 9,544 feet and productivity improved 5% to 1,031 car miles per employee.
Union Pacific said it remains hard to predict whether volume will be up overall through the rest of the year but the railroad remains confident that its profits will improve and it expects to buy back about $1.5 billion of stock this year.
Union Pacific operates trains across 23 states in the western half of the country.
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