Freight Railroads Riding High
Union Pacific announced all-time quarterly records July 19 in operating revenue and income. Norfolk Southern's earnings call on July 24 follows a record-breaking first quarter.
Coal shipments are down across the board, but the biggest U.S. freight railroads are nonetheless posting strong financial results, with the companies' executives saying their railroads are operating more efficiently. CSX Corporation on July 17 said its employee safety performance in 2Q 2012 was the best in its history.
Omaha-based Union Pacific Corporation on July 19 reported its 2Q net income was $1 billion, up from $785 million a year earlier. Operating revenue and operating income for the quarter were all-time quarterly records, and UP's customer satisfaction index reached 93, tying the best-ever quarterly record, CEO Jack Koraleski and other executives said.
While 2Q coal freight revenues fell 9 percent, revenues rose for automotive freight by 25 percent, for industrial products by 14 percent, for chemicals by 13 percent, and for intermodal by 10 percent, according to the company. "We're clearly delivering on the strength of our diverse franchise," said Koraleski. "Volume growth across many of our market sectors offset the 17 percent decline in coal volumes. When combined with solid pricing, efficient network operations, and continued productivity gains, the net result was our best-ever quarter by nearly every financial measure."
Besides the impressive safety performance, Jacksonville, Fla.-based CSX said its operating income in the second quarter of 2012 rose to $943 million. "CSX delivered its 10th straight quarter of year-over-year earnings growth despite significant headwinds in its utility coal business," said Michael J. Ward, chairman, president, and CEO. "This team remains focused on the safety of our employees and communities, service to our customers, and productivity in our operations. CSX employees delivered record employee safety results and a significant improvement in the train accident rate."
Norfolk Southern Corporation's CEO Wick Moorman and other executives will announce their 2Q earnings on July 24. Its 1Q net income of $410 million was 26 percent higher than the year-earlier quarter.