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Union Pacific's second-quarter profit improved a bit, but the railroad's expenses jumped as it tried to reduce the delivery delays that have left its customers waiting for trains at times.
The Omaha, Nebraska-based railroad said Thursday that its profit grew 2% to $1.84 billion, or $2.93 per share, in the quarter. That's up slightly from last year's $1.8 billion, or $2.72 per share.
The results beat Wall Street expectations even though Union Pacific's performance disappointed with two key performance measures — the speed of its freight cars and locomotive productivity — down 12%. The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of $2.82 per share.
The soaring price of diesel also weighed on the results although fuel surcharges and rate increases helped offset that. The railroad said its revenue grew 14% to $6.27 billion in the period, also topping Street forecasts. Five analysts surveyed by Zacks expected $6.11 billion. But expenses were up 25% at $3.8 billion.
JUDGE ORDERS UNION PACIFIC TO REHIRE ENGINEER WHO DEFECATED ON TRAIN
UP CEO Lance Fritz said the railroad's performance improved throughout the quarter after it imposed limits on the number of cars customers could ship, and he expects that improvement to continue as the railroad hires and trains more workers to handle the demand.
Union Pacific said it has added 486 new train crew members so far this year to help move its trains, and it has another 504 in training. The railroad said it is on track to hire about 1,400 people this year, but hiring has been difficult amid ongoing worker shortages.
Businesses that rely on the railroads to deliver the raw materials they need and their finished products have been complaining for months about delays along Union Pacific and the other major freight railroads. At times, some companies have had to reduce production because they were waiting for trains.