Union Pacific Corp.'s fourth-quarter profit fell a less-than-expected 17 percent as shipping demand continued to wane for the railroad company, The Wall Street Journal reported.
Earnings "reflected the continued impact of the recession that began in 2008," said Chairman and Chief Executive Jim Young. "Although still uncertain, the economic picture for 2010 looks somewhat more favorable than it did a year ago."
The company said it saw "slightly stronger" demand in the fourth quarter over "soft" prior-year volume levels in half of its business groups.
Fourth-quarter volume slumped 5 percent overall, compared to a 15 percent slide in the third quarter.
CSX Corp. reported similar volume trends earlier this week. CSX, the first of the top U.S. railroads to post fourth-quarter results, said quarterly volume dropped 7 percent, but the figure marked its best year-over-year volume performance of 2009.
Union Pacific, like the rest of the freight-transport industry, was stung in 2009 by declining freight volumes, which led to suffering bottom lines and slumping revenue across all of its sectors. In October, Union Pacific noted its business volumes had seemed to stabilize, but at very low levels, as the economy began to recover.
Union Pacific posted fourth-quarter profit of $551 million, or $1.08 a share, down from $661 million, or $1.31 a share, a year earlier. Operating revenue dropped 12 percent to $3.75 billion.
Analysts polled by Thomson Reuters had most recently forecast earnings of $1.04 on $3.78 billion in revenue.
Freight revenue dropped across all business segments, with the energy segment--which consists primarily of coal shipments and constitutes the company's biggest by revenue -- falling 22 percent, and its industrial-products segment seeing a 28 percent slump. The least-hurt segment was automotive, which saw revenue fall 1 percent.
Union Pacific said coal stockpiles at electric utilities are high. The view echoed that of CSX Corp., which warned this week that coal demand could be weak through most of 2010.
Union Pacific shares closed at $63.73 Wednesday and weren't active premarket.
(The preceding article by Bob Sechler and Nathan Becker of the Dow Jones Newswires was published January 21, 2010, by The Wall Street Journal.)
