UP cites record 4Q, full-year profit

Union Pacific Corp. said Thursday that its fourth-quarter profit increased 41% over the comparable period a year ago, due to an improving U.S. economy and an increase in traffic volume. That helped the company notch its most profitable year in its 149-year history.

Net income of $775 million, or $1.56 per share, was up from $549 million, or $1.08 per share, a year ago. That handily surpassed Wall Street consensus estimates of $1.48 a share on revenue of $4.35 billion. Total revenue rose 17% to $4.4 billion from last year’s $3.8 billion. UP’s operating ratio for the quarter was 70.2%, an improvement of 3.2 points.

Union Pacific Chairman and CEO Jim Young said the economy’s gradual improvement translated into a 9% increase in shipping volume during the last three months of 2010. “As we look ahead to 2011, we are encouraged by signs of a slowly strengthening economy,” Young said.

UP revenue was up in all six sectors of its business during the fourth quarter, with the largest increase occurring in industrial products and intermodal traffic.

For the full year, UP reported net income up 47% to $2.8 billion, on diluted earnings per share of $5.53, up 48%. UP said its operating ratio for the full year was 70.6%, an improvement of 5.5 points.

The company said roughly 1,500 employees remained furloughed at the end of 2010, down from 4,200 at the end of 2009. As for equipment, UP had 35,000 railcars and 1,050 locomotives stored at the end of 2010, down from 2009, when Union Pacific had 44,000 railcars and 1,600 locomotives stored due to the ailing economy.