Bookmark and Share

Union Pacific Reports Fourth Quarter Earnings

Record 2009 Operating Ratio

Omaha, Neb., January 21, 2010 – Union Pacific Corporation (NYSE: UNP) today reported 2009 fourth quarter net income of $551 million, or $1.08 per diluted share, compared to $661 million, or $1.31 per diluted share in the fourth quarter 2008.

Fourth Quarter 2009 Highlights

  • Operating income totaled $1 billion, down 12 percent.
  • Net income down 17 percent to $551 million.
  • Operating ratio was 73.3 percent, a new quarterly record versus 73.4 percent in 2008.
  • Customer Satisfaction Index of 88 ties a quarterly best, up 3 points.

Full Year 2009 Highlights

  • Operating income totaled $3.4 billion, down 17 percent.
  • Net income down 19 percent to $1.9 billion.
  • Operating ratio was a record 76 percent, a 1.3 point improvement.
  • Customer Satisfaction Index, up 5 points, set a record at 88.

"Union Pacific's fourth quarter earnings reflected the continued impact of the recession that began in 2008," said Jim Young, Union Pacific chairman and chief executive officer. "In this difficult environment, we've continued to focus on running our business efficiently and improving customer service. As a result, we finished the year with new records in safety, service, customer satisfaction and efficiency."

Fourth Quarter Summary

Slightly stronger fourth quarter demand led to an increase over soft prior year volume levels in three of Union Pacific's six business groups: Intermodal, Agricultural and Automotive. Fourth quarter 2009 operating revenues totaled $3.8 billion versus $4.3 billion in the fourth quarter 2008. In addition:

  • Business volumes, as measured by total revenue carloads, were down 5 percent versus the fourth quarter 2008. Year-over-year freight revenues declined 13 percent to $3.5 billion in the fourth quarter 2009 as a result of lower volumes and a $320 million reduction in fuel surcharge revenue.
  • Quarterly diesel fuel prices decreased 17 percent from an average of $2.46 per gallon in the fourth quarter 2008 to an average of $2.05 per gallon.
  • Union Pacific's operating ratio improved to 73.3 percent from 73.4 percent in 2008, the fourth consecutive year of fourth quarter records, primarily due to ongoing efficiency initiatives and pricing gains that offset the impact of lower volumes.
  • The Company's Customer Satisfaction Index of 88 improved 3 points and ties a quarterly best.
  • Quarterly train speed, as reported to the Association of American Railroads, was 27.0 mph, up 1.9 mph or 8 percent versus the fourth quarter 2008. This improvement reflected continued productivity and operational improvements, as well as the impact of lower volumes.

Summary of Fourth Quarter Freight Revenues

  • Automotive was down 1 percent.
  • Intermodal was down 3 percent.
  • Agricultural was down 7 percent.
  • Chemicals was down 7 percent.
  • Energy was down 22 percent.
  • Industrial Products was down 28 percent.

2009 Full Year Summary

For the full year 2009, Union Pacific reported net income of $1.9 billion or $3.75 per diluted share. This compares to $2.3 billion or $4.54 per diluted share in 2008.  The Company's 2009 operating revenue totaled $14.1 billion, compared to $18 billion in 2008. Operating income decreased 17 percent from 2008 to $3.4 billion.

  • Business volumes were down 16 percent versus 2008.
  • Freight revenues declined 22 percent to $13.4 billion in 2009 as a result of lower volumes and a $1.7 billion reduction in fuel surcharge revenue versus 2008.
  • Average diesel fuel price per gallon decreased 44 percent from $3.15 to $1.75.

Outlook

"Although still uncertain, the economic picture for 2010 looks somewhat more favorable than it did a year ago," Young said. "We will continue executing Union Pacific's long-term strategy to improve safety, customer service, productivity and efficiency. Our network management initiatives and strategic growth investments should position us to take full advantage of new business opportunities. The new safety and service records set in 2009 give customers increasing confidence that UP will serve their business needs in a safe, timely and efficient manner. As volumes return, these efforts provide us with opportunities to generate significant margin leverage and strong financial returns for our shareholders."

About Union Pacific

Union Pacific Corporation owns one of America's leading transportation companies. Its principal operating company, Union Pacific Railroad, links 23 states in the western two-thirds of the country. Union Pacific serves many of the fastest-growing U.S. population centers and provides Americans with a fuel-efficient, environmentally responsible and safe mode of freight transportation. Union Pacific's diversified business mix includes Agricultural Products, Automotive, Chemicals, Energy, Industrial Products and Intermodal. The railroad emphasizes excellent customer service and offers competitive routes from all major West Coast and Gulf Coast ports to eastern gateways. Union Pacific connects with Canada's rail systems and is the only railroad serving all six major gateways to Mexico, making it North America's premier rail franchise.

Investor contact is Jennifer Hamann, (402) 544-4227.
Media contact is Donna Kush, (402), 544-3753.

****

This press release and related materials contain statements about the Corporation's future that are not statements of historical fact, including specifically the Corporation's outlook regarding economic conditions, future productivity, future safety and operating performance, the success and outcome of network management initiatives and strategic investments, competitiveness and quality of service, and its ability to generate financial returns and significant margin leverage and take advantage of new business opportunities. These statements are, or will be, forward-looking statements as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934. Forward-looking statements also generally include, without limitation, information or statements regarding: projections, predictions, expectations, estimates or forecasts as to the Corporation's and its subsidiaries' business, financial, and operational results, and future economic performance; and management's beliefs, expectations, goals, and objectives and other similar expressions concerning matters that are not historical facts.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times that, or by which, such performance or results will be achieved. Forward-looking information, including expectations regarding operational and financial improvements and the Corporation's future performance or results are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statement. Important factors, including risk factors, could affect the Corporation's and its subsidiaries' future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. Information regarding risk factors and other cautionary information are available in the Corporation's Annual Report on Form 10-K for 2008, which was filed with the SEC on February 6, 2009. The Corporation updates information regarding risk factors if circumstances require such updates in its periodic reports on Form 10-Q and its subsequent Annual Reports on Form 10-K (or such other reports that may be filed with the SEC).

Forward-looking statements speak only as of, and are based only upon information available on, the date the statements were made. The Corporation assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. If the Corporation does update one or more forward-looking statements, no inference should be drawn that the Corporation will make additional updates with respect thereto or with respect to other forward-looking statements. References to our Web site are provided for convenience and, therefore, information on or available through the Web site is not, and should not be deemed to be, incorporated by reference herein.

The statements and information contained in the news releases provided by Union Pacific speak only as of the date issued. Such information by its nature may become outdated, and investors should not assume that the statements and information contained in Union Pacific's news releases remain current after the date issued. Union Pacific makes no commitment, and disclaims any duty, to update any of this information.