UP 2Q Profit Falls 12 Pct but Beats Expectations

FILE - In this April 11, 2009 file photo, a crowd gathers in downtown Laramie, Wyo. to catch a...

FILE - In this April 11, 2009 file photo, a crowd gathers in downtown Laramie, Wyo. to catch a glimpse of the Union Pacific 844 Steam Engine. Railroad Union Pacific said Thursday, July 23, 2009, its second-quarter earnings fell 12 percent, as stringent cost cutting partially offset major shipping declines across its business.(AP Photo/Laramie Boomerang, Ben Woloszyn, file)

(AP)

Union Pacific Corp. reported a 12 percent drop in its second-quarter net income Thursday as shipping demand remained weak, but the railroad beat expectations by keeping expenses 30 percent lower and selling some land in Colorado.

The Omaha-based railroad reported $468 million, or 92 cents per share, net income in the quarter that ended June 30. That's down from $531 million, or $1.02 per share, a year ago.

The company's earnings include a land sale that added $72 million net income, or 14 cents per share.

Operating revenue fell 28 percent to $3.3 billion.

Thomson Reuters said the analysts it surveyed expected Union Pacific to report earnings per share of 76 cents on $3.51 billion revenue. Analyst estimates typically exclude one-time items.

Union Pacific reported sharply lower costs in the quarter, with fuel costs decreasing the most, to $370 million from $1.2 billion.

Union Pacific hasn't offered a prediction for 2009 earnings because of the uncertain economy. Chairman and CEO Jim Young said Thursday that demand may have leveled off because the railroad has been shipping an average of 140,000 to 150,000 carloads a week for several months. But Young said there's not much reason to be optimistic yet.

"I just don't see anything out there that says you're going to jump back to a strong economy here in the next six months," Young said in an interview. "We've got a long ways to go before you can declare the recession's over."

Union Pacific's results are watched closely, because railroads are considered gauges of the nation's economic health. Railroads carry cars, chemicals, crops, containers of imported goods and lumber across the nation, so railroad profits are tied to the health of those industries.

Young said the economy has a long way to go until he feels good about it, and the railroad hasn't yet seen the federal stimulus package boost the need for construction materials much.