Union Pacific Revenue Remains Flat on Volume Drop

By Angela Chen 

Union Pacific Corp. said revenue stayed about flat in the first quarter, as the company struggled to "run an efficient operation" in the face of a 2% drop in volume.

Shares, which have been down about 7% this year, fell 2.4% in premarket trading as results missed expectations.

"While we took actions during the quarter to adjust for the volume decline, we did not run an efficient operation," Chief Executive Lance Fritz said. Declines in coal, industrial products, intermodal and chemicals offset growth in the automotive and agricultural segments.

Freight revenue fell 1% as well.

Mr. Fritz added, however, that the company benefited from pricing gains. In February, Union Pacific named Mr. Fritz, formerly chief operating officer, as the railroad company's chief executive, succeeding Jack Koraleski, whose retirement will start nearly two years later than planned.

Analysts have been expecting nearly all freight-rail companies to post strong results despite a steep decline in prices for crude oil--one of the fastest-growing parts of the rail business. However, some analysts expect freight-rail operators could face stiffer truck competition as lower fuel prices will trim the price advantage trains have had over trucks in recent years. Average quarterly diesel fuel prices fell 38% in the latest quarter.

While shipping crude oil isn't a big part of Union Pacific's business, rail congestion has been an issue for the whole sector.

Overall, Union Pacific reported a profit of $1.15 billion, or $1.30 a share, up from $1.09 billion, or $1.19 a share, a year earlier.

Revenue edged down slightly to $5.61 billion from $5.64 billion.

Analysts polled by Thomson Reuters expected per-share profit of $1.37 and revenue of $5.7 billion.

Write to Angela Chen at [e-mail]

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