Union Pacific profit up 7.8pc to US$1.04 billion, intermodal does well

AMERICA's biggest railway, the Union Pacific, has posted a 7.8 per cent fourth quarter net profit increase year on year to US$1.04 billion, drawn on revenues of $5.25 billion, up three per cent.

The rise was attributed to higher pricing that compensated for a two per cent volume decline, marked by fewer coal shipments due to low natural gas prices, high stockpiling and weak global demand. Agricultural volume also suffered due to drought.

But coal and agricultural declines were offset by growth in chemical, automotive and intermodal shipment, the company said.

Warning of a tough 2013 ahead, Union Pacific CFO Rob Knight said: "We are cautious on the economic outlook for this year. We are expecting to see many of the same challenges we faced last year."

But Mr Knight said he expects positive volume growth in 2013 if industrial production in the United States expands at the projected rate of two per cent as this would help offset the weakness in coal movements.

The company was closely watching developments in Washington and how it impacts economic growth, he said.

CSX Corp, Union Pacific's closest publicly traded rival, said a return to volume growth was dependent on how soon Washington agreed on a long-term fiscal plan as the uncertainty was affecting business and consumer confidence, said Reuters.