Union Pacific avoids oil plunge beartburn

Angela Johnson
Union Pacific CEO: Playing low oil carefully

As industries across the globe continue to grapple with the precipitous drop in oil prices, railroad operator Union Pacific is playing the oil plunge carefully.

"I guess the question in our minds is how low will it go and how low long will it stay there, and will it stay there long enough to significantly change people's behavior," said Jack Koraleski, Union Pacific CEO, to CNBC on Thursday.

Lower oil prices have proven to be a boon and a challenge for some industries, but Koraleski feels Union Pacific is well positioned to reap the benefits of lower oil prices without the accompanying heartburn.


"If the consumers have discretionary spending brought about by lower gas prices and things like that; they're going to be building houses, buying automobiles, furniture, all of those things that are sweet spots for our franchise," said Koraleski.

"So it's kind of a win for us either way, the lower fuel prices are also a help overall."

A worker in a Union Pacific locomotive maintenance facility, in Roseville, California.
Ken James | Bloomberg | Getty Images

It appears Koralesk is spot on; the railroad posted fourth-quarter revenue of $6.15 billion, beating analysts' expectations of $6.1 billion, and posted a profit of $1.61 per share, beating Wall Street expectations of $1.51 per share.

"Our outlook is actually pretty favorable; we see the economy continuing a nice, moderate growth pattern that we saw at the end of 2014," said Koraleski. "We feel good about what's happening. "

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