Union Pacific Raises Guidance
Union Pacific
(UNP) - Get Report
raised its first-quarter earnings and revenue estimate Tuesday, saying January's West Coast storms didn't affect its rail operations to the extent it had originally feared.
The company expects to earn 43 cents to 48 cents a share in the quarter, up from its previous estimate of 25 cents to 35 cents. Revenue growth should be 8% over last year's first quarter, up from its previous expectation for a 4% to 6% jump.
Analysts surveyed by Thomson First Call were forecasting earnings of 35 cents a share to $3.02 billion.
Union Pacific said first-quarter carload volume should be up 1% from a year ago, with "higher yields and fuel surcharges responsible for the remainder of the projected revenue growth."
The company had initially estimated the West Coast storm would result in $100 million in incremental capital costs and another $100 million in lower operating earnings. In fact, the storm will result in $60 million in additional capital costs and just $55 million of lower operating income.
Union Pacific said first-quarter diesel fuel costs are expected to average $1.43 a gallon vs. the projected range of $1.30 to $1.35. "In addition, operating expenses continue to be affected by ongoing network challenges. The operating margin for first-quarter 2005 is expected to be slightly less than 10%," the company said.
"Although the storm challenges greatly impacted operations in our Western region, we've seen improvements that helped increase our overall network velocity during the first quarter," the company said. "Today, we are focusing, with renewed energy, on improving the efficiency and productivity of our network operations."