No. 1 U.S. railroad Union Pacific on Thursday reported a better-than-expected profit as strong pricing offset rising fuel costs, flooding in the U.S. Midwest and lower freight volumes.
"Although high fuel prices and a soft economy present challenges, we remain committed to ongoing productivity and customer service initiatives as we look forward to achieving a record year," Chief Executive Jim Young said in a statement.
The Omaha, Nebraska-based company reported second-quarter net income of $531 million, or $1.02 per share, compared with $446 million, or 82 cents per share, a year earlier.
Analysts had on average expected earnings per share of 92 cents, according to Reuters Estimates.
Union Pacific estimated that the widespread flooding in the Midwest in June had reduced earnings by 5 cents per share.
Revenue rose 13 percent to $4.57 billion from $4.05 billion.
Analysts had expected $4.49 billion.
Rail carloads during the quarter fell 3 percent to 2.37 million from 2.43 million.
Agricultural product carloads were up 11 percent, but automotive shipments fell 20 percent, reflecting the problems of the U.S. auto industry, which is experiencing its worst sales in a decade.
Like the other major U.S. railroads, Union Pacific has reported rising profits in recent quarters as strong pricing has more than compensated for a weak economy and lower freight volumes.
In light trading before the market opened, Union Pacific shares were up 1.5 percent at $78.50.