Coal news and updates

Weak coal volumes help propel earnings miss at Union Pacific

Union Pacific Corp said on Thursday its first quarter results were hurt by a drop in coal volumes and the company warned coal would continue to weigh on its results throughout the year.

The No. 1 U.S. railroad posted a higher quarterly net profit as lower fuel costs and pricing gains offset falling freight volumes, but its results missed market expectations.

The company's shares fell more than 2 percent in early trading.

Union Pacific said coal volumes fell 5 percent during the quarter. U.S. utilities have taken advantage of lower natural gas prices, burning less coal in the process. The strong U.S. dollar has hurt coal exports.

CSX Corp and Norfolk Southern Corp, the third and fourth largest railroads, respectively, have also reported first-quarter results impacted by declining coal usage, as has regional railroad Kansas City Southern.

Low natural gas prices should affect the company's coal business throughout 2015, Union Pacific executives said in a conference call with analysts.

Overall, the company's freight volumes fell 2 percent, with declines in all segments except agricultural products and automotive.

"Shares will be pressured on these results, but we have confidence that Union Pacific will be able to adapt resources appropriately to the volume outlook in coming quarters," Citi analyst Christian Wetherbee wrote in a client note, reiterating a "buy" rating on the stock.

Low oil prices pushed Union Pacific's crude oil volumes down 39 percent. "Intermodal" consumer goods shipments were off 3 percent, which the railroad attributed to a labor dispute at the West Coast ports that was resolved during the quarter.

"While we took actions during the quarter to adjust for the volume decline, we did not run an efficient operation," Chief Executive Lance Fritz said in a statement.

Omaha-based Union Pacific posted first-quarter net income of $1.15 billion or $1.30 per share, up 5.5 percent from $1.09 billion or $1.19 per share a year earlier.

Analysts had expected earnings per share of $1.37.

The company said revenue in the quarter dipped slightly to $5.61 billion from $5.64 billion, which was below analyst expectations of $5.7 billion.

Union Pacific's fuel bill in the first quarter fell nearly 39 percent to $564 million from $921 million. That decline was somewhat offset by a corresponding drop in fuel surcharges the railroad passes on to its customers.

In early trading, Union Pacific shares were down more than 2.6 percent at $107.81.

Source: http://in.reuters.com