Union Pacific Railroad is the principal operating company of Union Pacific Corporation (UNP, Financial). One of America's most recognized companies, Union Pacific Railroad connects 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. From 2007-2014, Union Pacific invested more than $25.8 billion in its network and operations to support America’s transportation infrastructure.
The railroad’s diversified business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products and Intermodal. Union Pacific serves many of the fastest-growing U.S. population centers, operates from all major West Coast and Gulf Coast ports to eastern gateways, connects with Canada's rail systems and is the only railroad serving all six major Mexico gateways. Union Pacific provides value to its roughly 10,000 customers by delivering products in a safe, reliable, fuel efficient and environmentally responsible manner.
UNP received 2014 Logistics Excellence Awards in Customer Service and Service Performance from Toyota Logistics Services. This marks the seventh consecutive year Union Pacific has earned the Excellence in Customer Service recognition for superior performance and the fourth time in the last six years that the railroad has received the transit and service performance award.
The awards are based on Union Pacific's commitment to outstanding service, ranging from customized logistics offerings to a solid supply of equipment when and where it's needed.
Strong first quarter
Net income
Net income increased in the first quarter of 2015 and was $1.2 billion ($1.30 per diluted share), compared to $1.1 billion in the first quarter of 2014 ($1.19 per diluted share).
EPS
Earnings per share during the quarter were 9%.
Operating revenue
Operating revenues totaled at $5.6 billion.
Freight revenues
Freight revenues declined by 1% compared to first quarter of 2014.
Operating ratio
The operating ratio in the first quarter was better than what it was during the first quarter of 2014. This quarter it was 64.8%. It was 2.3 points better than 2014.
Share repurchases
UNP repurchased around 6.9 million shares at a cost of $ 807 million during the quarter.
Quarterly train speed
First quarter train speed was 24.6 mph, which seemed to be flat when compared to the first quarter of 2014.
Miscellaneous
The company adjusted its 2015 capital program down $100 million to approximately $4.2 billion. The $1.95 per gallon average quarterly diesel fuel price in the first quarter 2015 was down 38 percent compared to the first quarter of 2014. Coal, intermodal and shale-related business suffered losses.
2015 outlook
The company is all poised to face the challenges and is taking the necessary steps. CEO Lance Fritz expects to see solid improvement in the network performance. The company is already adopting cost curtailment programs. The company is taking steps to align its resources with the current demand. Its rail projects are in demand from many. Catering to these projects the company is going to see growth in the coming future.
From 2009-2013, Union Pacific invested more than $1.4 billion in California's rail infrastructure. The company plans to spend a record $4.3 billion across its network this year, following investments totaling more than $31 billion from 2005-2014. These investments contributed to a 38 percent decrease in derailments over the last 10 years.
To end
UNP is proud of the partnerships it shares with the 7,300 communities it serves throughout the western two-thirds of the United States. It's a tradition that began more than 150 years ago, and that will continue tomorrow and beyond. It had a capital spending of $13.0 billion within 2010-2013. In the western states, the company has a monopoly. The company has a competitive edge since there are relatively fewer entrants in the railroad industry. But again, this industry faces competition from other modes of transport.
The company derives strength from its diverse franchise and is currently focused on safety, service and shareholder returns. The company posted strong first quarter results and the company has good valuation. It has a good track record of returning dividends to its shareholders and is expected to do so in the coming future. For the last five years, the company has witnessed growth. The company has created a mark of its own in the railroad industry and boasts of a solid customer base. I think that the momentum is going to continue for this company. Investors may consider adding this company to their portfolio.
(Source: Company’s Website)
