Union Pacific Boosted by Easing Commodities Slump

By Ezequiel Minaya 

Union Pacific Corp. said slumping demand for the commodities it transports eased in the fourth quarter, helping the company post a better-than-expected profit.

"While full-year volumes were down substantially year over year, we did see declines moderate in the fourth quarter," said Chief Executive Lance Fritz.

The Omaha, Neb., company's shares, up 40% over the past 12 months, rose 3% to $106.90 in premarket trading.

Fourth-quarter total revenue carloads slipped 3% compared with 2015. Freight revenue for coal retreated 6% in the fourth-quarter to $699 million, compared with 25% for the year. Revenue for the industrial products segment fell 2% compared with 12% annually. The Intermodal business, which moves freight using a combination of trains and trucks, were nearly flat at $969 million, an improvement to the 9% slide tallied for the year.

"Higher energy prices, favorable agricultural markets and improving business and consumer confidence all support a return to positive volume growth this year," Mr. Fritz said.

Over all, Union Pacific reported a profit of $1.14 billion, or $1.39 a share, up from $1.11 billion, or $1.31 a share, a year earlier. Revenue was nearly flat, retreating less than 1% to $5.17 billion.

Analysts polled by Thomson Reuters expected per-share profit of $1.33 and revenue of $5.1 billion.

Commodity demand in 2017 will be shaped by the opposing trends of a moderate slowdown in Chinese housing versus growth in the other major industrial economies.

The J.P. Morgan/Markit global manufacturing PMI hit a 34-month high in December, with the U.S., Japanese, German, and eurozone PMIs all notching their highest marks in a year or more, building on a sustained uptrend visible since at least September.

Nathaniel Taplin contributed to this article

Write to Ezequiel Minaya at [e-mail]

(END) Dow Jones Newswires

January 19, 2017 09:07 ET (14:07 GMT)

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