Union Pacific profit climbed 5% as it builds the case for its acquisition of rival Norfolk Southern
OMAHA, Neb. (AP) — Union Pacific posted 5% higher earnings in the first quarter as the railroad struggled to prepare its report to convince regulators that its $85 billion acquisition of eastern rival Norfolk Southern was a good idea.
The Omaha, Nebraska-based railroad said Thursday it earned $1.7 billion, or $2.87 per share. however, merger-related costs are estimated to reduce results by 6 cents per share. That’s still up from $1.63 billion, or $2.70 per share, last year. And the results were above the $2.86 per share expected by analysts surveyed by FactSet Research.
Union Pacific CEO Jim Vena said the railroad continued to be more efficient during the quarter because it benefited from higher rates, even as it prepared for the merger.
“Our safety, service and operating momentum continued in the first quarter as our great railroad further challenged the ‘possible,’” Vena said.
Despite shipping about 1% fewer shipments, the railroad’s revenue rose 3% to $6.22 billion. That’s because the rates it charges continue to rise and the railroad benefits from fuel surcharge fees.
Union Pacific’s expenses also increased 3% to $3.76 billion.
The railway confirmed its forecast for mid-single-digit growth in earnings per share this year, in line with its long-term plan. It plans to invest $3.3 billion in its operation.
Union Pacific plans to resubmit its application acquired Norfolk Southern next week. The U.S. Surface Transportation Board rejected the railroad’s initial request to approve the $85 billion merger because regulators wanted more information. The STB has not yet decided whether the agreement, which would reduce the number of large freight railways to five, would harm competition.
The deal, which would have created the nation’s first transcontinental railroad, divided workers and shippers who relied on both railroads. UP is currently one of the largest railroads and serves the western United States. The country’s largest railway union and several smaller unions supported unification After Union Pacific promised its workers they would have jobs for life, two of the other largest unions representing engineers and track maintenance workers oppose it.
The railways’ customers are also divided into representative trade groups. chemical makers And agricultural businesses are voicing their concerns, but hundreds of other businesses are lining up behind it. President Donald Trump also said the agreement was good for him.
vein argued Creating a coast-to-coast railroad would be good for the economy, he said, because rail shipments would move faster through the middle of the country without the need to switch between railroads, meaning it could better compete against trucking.
