Double-digit increases in automotive and chemical shipments, along with lower fuel prices, drove Union Pacific to a record profit of $1 billion in the second quarter.
The company’s profit jumped 28 percent year-over-year, as revenue rose 7 percent to $5.2 billion in the second period, despite flat volume growth. A 3 percent increase in intermodal volume helped offset a 17 percent plunge in coal traffic.
"Volume growth across many of our market sectors offset the 17 percent decline in coal volumes. When combined with solid pricing, efficient network operations and continued productivity gains, the net result was our best-ever quarter by nearly every financial measure,” said UP CEO Jack Koraleski.
Revenue from all business categories except for coal saw gains, with automotive business seeing the largest rise of 25 percent to $475 million. Intermodal revenue rose 10 percent year-over-year to $1 billion in the same period, while chemical business increased 13 percent to $795 million.
The average revenue per railcar and intermodal unit, a key measure of rail pricing, rose 6 percent year-over-year to $2,217. The average business the railroad gained from an intermodal unit rose 7 percent to $1,185.
The railroad’s operating ratio improved 4.3 percentage points to 67 percent compared to the same period in 2011. UP operating income rose 24 percenet year-over-year to $1.7 billion.
"Looking ahead to the second half of the year, the global economic outlook has become more uncertain and coal volumes remain a challenge," Koraleski said.