Union Pacific fourth quarter profit up 41%

Union Pacific (UNP) reported a 41 percent increase in fourth-quarter earnings that topped Wall Street's forecast, even as the rate of growth in the railroad's freight volume slowed and high diesel prices weighed on results, reported Dow Jones Newswires.

But the railroad offered an upbeat 2011 outlook nonetheless, with chief executive Jim Young saying the economic recovery is continuing and may even be picking up some steam.

"I'm starting to hear from our customers that they're hiring," Young said. "There seems to be a more positive tone" over the past month to six weeks.

Union Pacific announced hiring plans of its own, saying it likely would add "4,000-plus" workers this year, on top of bringing back some of the remaining 1,500 employees it currently has on furlough. The hiring will offset attrition as well as help the railroad handle what it expects to be continued volume growth.

Union Pacific, Omaha, Nebraska, had about 43,500 employees at the end of 2010.

The railroad said fourth-quarter volume was up nine percent compared with the year-earlier period and climbed across all six of its major business segments. But the growth rate continued a deceleration from 14 percent in the third quarter and 18 percent in the second quarter.

Young chalked up the trend to more difficult comparisons as the year progressed, rather than to a hiccup in the economic recovery. Union Pacific's overall volume has been up about 10 percent so far in the first quarter, although Young declined to provide a precise quarterly forecast.

"I feel good about our possibilities here this year," Young said. "We are looking at continued [volume] growth this year."

Meanwhile, he said Union Pacific isn't seeing a big buildup in intermodal shipments ahead of Chinese New Year in early February, when factories in China typically shut down for a weak or more. The holiday can cause something of a bubble as importers rush to get goods into the US in advance of the shutdown.

Young said shippers appear to be confident in their supply chains this year. "I just don't see any surprises" related to Chinese New Year this year, he said.

Union Pacific reported a fourth-quarter profit of US$775 million, up from $549 million a year earlier. Revenue jumped 17 percent to $4.41 billion, following a 12 percent decline a year earlier.

Operating margin widened to 29.8 percent from 26.6 percent.

Union Pacific said fourth-quarter diesel fuel prices averaged $2.46 a gallon, up 20 percent from the year-earlier period and the highest quarterly price in two years.

Freight revenue climbed across all categories, with energy--the largest contributor--showing a 16 percent increase. Revenue per carload increased eight percent.
(Source:www.cargonewsasia.com)