Union Pacific plans more job cuts after profit drops
(Bloomberg News circulated the following story by Angela Greiling Keane on April 23, 2009.)
NEW YORK Union Pacific Corp., the second- biggest U.S. railroad, reported a less-severe drop in profit than analysts expected on savings from lower fuel costs and job cuts, and said it will pare as many as 4,000 more positions.
First-quarter net income fell 18 percent to $362 million, or 72 cents a share, the company said in a statement today. Analysts expected 68 cents a share, the average of five estimates compiled by Bloomberg. The carrier rose as much as 4.7 percent in New York trading.
Union Pacific trimmed its workforce 8 percent from a year earlier and said in January it would run 25 percent fewer trains as the recession slowed shipments of coal, automobiles and consumer goods. The carrier will eliminate 3,000 to 4,000 more jobs by the end of 2009 through attrition, Chief Executive Officer James Young said on a conference call with analysts.
The difficult economic conditions continue to affect our business volumes, Young said in the statement. During this challenging time, we are reducing costs across the board, strengthening our operations and offering competitive supply chain solutions to our customers.
Sales for the quarter fell 20 percent to $3.4 billion. The companys net income in the year-ago quarter was $443 million, or 85 cents a share.
Union Pacific rose $2.21, or 4.6 percent, to $49.93 at 10:01 a.m. in New York Stock Exchange composite trading. The shares lost less than 1 percent this year before today.
The carrier said it had 44,997 employees on average in the quarter, down from 49,073 in the year-earlier period. About 4,500 locomotive operators are on furlough, said Tom Lange, a company spokesman.
Canadian Pacific
Canadian Pacific Railway Ltd., Canadas second-largest railroad, said earlier today that first-quarter profit fell 31 percent to C$62.5 million ($50.7 million), or 39 cents a share.
The carrier rose 4 cents to C$41.04 in Toronto Stock Exchange trading.
Freight-shipping declines reported by both railroads reflect the toll of slower consumer and corporate spending that pared freight demand as the U.S. recession entered its second year. In response, companies including Union Pacific and Canadian Pacific have been reining in spending.
CSX Corp., the third-biggest U.S. carrier, said last week that net income fell less than analysts had expected.
Burlington Northern Santa Fe Corp., the largest U.S. railroad by sales, is scheduled to report its first-quarter earnings today after the close of regular trading on the New York Stock Exchange.
