John D. Boyd, Associate Editor | Oct 20, 2011 10:32AM EDT
Third-quarter profit at Union Pacific, North America’s largest railroad, rose 16 percent to $904 million despite slim volume growth in what its CEO called an “uncertain” economy.
Revenue also rose 16 percent year-over-year to $5.1 billion during the July-September period, when UP was fighting to restore service in flood and drought-battered regions.
The results nudged net profit to 17.7 percent of total revenue, from a 17.6 percent profit margin in the 2010 quarter. UP said a mix of fuel surcharge receipts, “core pricing gains” and volume growth all contributed.
Freight volume rose just 1 percent for the western railroad, the same as reported earlier by eastern carrier CSX Transportation. UP’s revenue ton-miles increased 4 percent, a sign of heavier per-unit loadings.
Intermodal volume shrank 6 percent and agricultural carloads fell 3 percent. However, UP had a 10 percent gain in automotive shipments, while industrial product carloads gained 8 percent.
Average revenue per shipment rose 14 percent, led by 15 percent increases for intermodal and industrial products. UP officials have said they have firmed up their pricing strategy for domestic box loads in particular, and were willing to shed some volume to bolster average returns on that business.
Both UP and CSX reported record third-quarter financial results. James R. Young, UP’s chairman, president and CEO, said “while the economic outlook is uncertain, we’re optimistic about the future for Union Pacific” and its ability to deliver record financials from a diverse customer base. UP bought 4.7 million of its common shares in the period.
Average revenue per shipment rose 14 percent, led by 15 percent increases for intermodal and industrial products. UP officials have said they have firmed up their pricing strategy for domestic box loads in particular, and were willing to shed some volume to bolster average returns on that business.
UP carried an average of 45,507 workers on its third-quarter payroll, up 5 percent. Its average price paid for locomotive diesel fuel jumped 42 percent from a year earlier to $3.18 a gallon.
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