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Union Pacific Corp. Reports Operating Results (10-Q)

April 27, 2010 | About:
10qk

10qk

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Union Pacific Corp. (UNP) filed Quarterly Report for the period ended 2010-03-31.

Union Pacific Corp. has a market cap of $38.96 billion; its shares were traded at around $77.11 with a P/E ratio of 19.8 and P/S ratio of 2.8. The dividend yield of Union Pacific Corp. stocks is 1.4%. Union Pacific Corp. had an annual average earning growth of 3.3% over the past 10 years.UNP is in the portfolios of Tweedy Browne of Tweedy Browne CO LLC, David Williams of Columbia Value and Restructuring Fund, NWQ Managers of NWQ Investment Management Co, Bruce Kovner of Caxton Associates, Chris Shumway of Shumway Capital Partners LLC, Kenneth Fisher of Fisher Asset Management, LLC, Richard Aster Jr of Meridian Fund, PRIMECAP Management, John Buckingham of Al Frank Asset Management, Inc., George Soros of Soros Fund Management LLC, John Keeley of Keeley Fund Management, Dodge & Cox, Murray Stahl of Horizon Asset Management, Steven Cohen of SAC Capital Advisors, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.

Highlight of Business Operations:

We reported earnings of $1.01 per diluted share on net income of $516 million in the first quarter of 2010 compared to earnings of $0.72 per diluted share on net income of $362 million for the first quarter of 2009. Freight revenues increased $515 million in the first quarter compared to the same period of 2009 driven by volume growth of 13%, higher fuel surcharges, and core pricing gains. Demand for our services increased compared to the first quarter of 2009, which was substantially impacted by the recessionary economy. Consistent with the prior year, we continued company-wide efforts to improve efficiency and reduce costs, in addition to adjusting our resources to reflect current demand levels. Although volume increased from levels in the first quarter of 2009, we leveraged this additional traffic with enhancements to our transportation plan, which improved asset utilization and minimized operational cost increases. As of March 31, 2010, we had 22% of our road locomotives and 14% of our freight car inventory in storage or maintained off-line, compared to 24% and 26%, respectively, at March 31, 2009. Additionally, these demand-driven resource adjustments and our productivity initiatives combined to reduce our workforce by 6%. These actions coupled with the volume growth and improved pricing also drove the higher earnings in the first quarter of 2010 versus 2009.

Fuel Fuel includes locomotive fuel and gasoline for highway and non-highway vehicles and heavy equipment. Higher diesel fuel prices, which averaged $2.16 per gallon (including taxes and transportation costs) in the first quarter of 2010 compared to $1.51 per gallon in the same period in 2009, increased expenses by $171 million. Volume, as measured by gross ton-miles, increased 9% in the first quarter versus 2009, driving expenses up by $31 million compared to 2009. Conversely, the use of newer, more fuel efficient locomotives, our fuel conservation programs, and efficient network operations drove a 4% improvement in our fuel consumption rate resulting in $14 million of cost savings.

Interest Expense Interest expense increased in the first quarter 2010 versus 2009 due to higher weighted-average debt levels. In the first quarter of 2010, our weighted-average debt level was $10.0 billion (including the restructuring of locomotive leases in May 2009), compared to $9.0 billion in the first quarter of 2009. Our effective interest rate was 6.2% in both the first quarter of 2010 and 2009.

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