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Union Pacific profit off 8pc to US$1.2 billion, as revenue sinks 10pc

THE Omaha-based Union Pacific Railway (UP) posted an eight per cent second quarter year-on-year net profit decline to US$1.2 billion, drawn on revenues of $5.4 billion, which fell 10 per cent.

"Solid core pricing gains were not enough to overcome a significant decrease in demand," said CEO Lance Fritz. "We will continue to reduce costs and improve productivity as we further align resources with demand."

The No 1 US railway reported six per cent lower freight volumes year on year led by a sharp decline in coal shipments, somewhat offset with higher freight rates charged.

The company said it expected freight volumes to remain down during the second half of the year.

Railways have been hit by lower coal volumes as power plants have shifted more to burning cheap natural gas as energy prices sink. Coal exports have also been hurt by a strong dollar.

Thus, UP coal volumes fell 26 per cent. Agricultural products were also down seven per cent and industrial products were off 13 per cent.

But automotive volume increased seven per cent and intermodal container throughput was up two per cent.

UP said that its core pricing rose four per cent during the quarter and it benefited from a fuel bill that was 41 per cent lower than the same period in 2014.