OMAHA, Neb. (AP) — Union Pacific managed to overcome weak coal demand and sluggish agricultural shipments by raising rates at the railroad in the fourth quarter.
But investors seemed mildly disappointed Thursday with the 7 percent growth in quarterly profit in light of the railroad's cautious forecast for more challenges in 2013.
UP's earnings beat Wall Street expectations but revenue fell just short. The stock lost $1.01 at $134.35 in afternoon trading.
Despite a 2 percent decline in total volume, Union Pacific earned $1.04 billion, or $2.19 per share. Revenue grew 3 percent to $5.25 billion. Analysts surveyed by FactSet expected $2.15 per share on revenue of $5.30 billion.
Union Pacific's results offer insight into the nation's economic health because of the variety of cars, crops, chemicals and containers of imported goods it carries. It has more than 32,400 miles of track in 23 states in the West, Midwest and Gulf coast.
The decline in coal is a concern for railroad investors. Coal demand has been weak in the past year because of relatively cheap natural gas prices and last year's mild winter. In the fourth quarter, Union Pacific hauled 17 percent less coal than the year before. Agricultural shipments were hurt by a drought and the temporary shutdown of some ethanol plants.
Chief Financial Officer Rob Knight predicted coal volumes will likely decline slightly in 2013, partly because at the start of the year the railroad lost a contract to haul 10 million tons of it.
But Knight said growth in other areas, especially crude oil hauled from areas like the Bakken Shale in North Dakota, will help the railroad.
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