(Adds 2017 outlook, background, company comment, stock price)
By Nick Carey
DETROIT, April 27 Union Pacific Corp on
Thursday reported better-than-expected quarterly profit, lifted
in particular by a 25 percent jump in coal freight volume, and
said it expects its freight business to grow in the low single
digits in 2017.
Like other major U.S. railroads, Union Pacific has been hit
over the past two years by a plunge in coal volumes as utilities
switched to burning cheaper natural gas and the strong U.S.
dollar hurt coal exports.
Coal freight volumes for U.S. railroads have picked up in
recent months from a low base.
"Coal seems to have stabilized and we are seeing signs of
improvement in other areas of the economy," Chief Executive
Lance Fritz said on a conference call with analysts.
The No. 1 U.S. railroad's shares rose 3 percent in early
Omaha, Nebraska-based Union Pacific said overall volumes, as
measured by total revenue carloads, increased 2 percent in the
quarter, compared with a year earlier.
No.3 U.S. railroad CSX Corp and No.4 Norfolk
Southern Corp also reported higher first-quarter profit
Union Pacific said it expects to improve its operating
ratio, a key metric for Wall Street that measures expenses as a
percentage of revenue, this year and that it plans to cut annual
costs by up to $400 million.
The railroad said it expects to increase prices at a rate
greater than the pace of inflation this year.
Union Pacific's net income rose to $1.07 billion, or $1.32
per share, in the first quarter, from $979 million, or $1.16 per
share, a year earlier.
Total operating revenue rose 6.3 percent to $5.13 billion.
Analysts on average had expected first-quarter profit of
$1.23 per share, and revenue of $5.04 billion, according to
Thomson Reuters I/B/E/S.
Union Pacific shares were last up 3.1 percent at $113.55.
(Additional reporting by Ankit Ajmera in Bengaluru; Editing by
Arun Koyyur and Meredith Mazzilli)