United Pacific Corporation’s (UNP) third quarter earnings of $1.02 per share were a penny ahead of the Zacks Consensus Estimate of $1.01 per share. Last year, the company had reported earnings of $1.38 per share. Results suffered due to global recession and related decline in rail traffic.
Total revenue was $3.7 billion, down 24.0% year over year. The yearly decline was driven by severe volume declines shrinkage of 15% and a much lower fuel surcharge recovery. Freight revenues declined 25% to $3.5 billion.
Diesel fuel prices decreased 49% to an average of $1.87 per gallon from an average of $3.70 per gallon last year.
Operating expense was $2.7 billion, down 26.0% year over year, mainly due to a 59.0% decline in fuel expense. Operating ratio was 73.7% versus 74.9% last year. The improvement was attributable to price increases, lower fuel prices, network management initiatives, improved productivity and reduced casualty expenses, which more than offset the significant volume declines.
Quarterly train speed was 27.4 mph, up 16% year over year. This improvement reflected productivity and operational improvements as well as lower volumes.
The company has been able to maintain a strong balance sheet position with adjusted debt to capital ratio moderating to 46.9% from 47.4% last year.
United Pacific expressed some optimism regarding its future business on the conviction that volume levels may have bottomed and that the economy seems to have stabilized. Management also believes record low inventories, improved financial stability within the sector and government incentives for the junking of older vehicles will support top-line growth.
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