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Union Pacific Nets $3.3 Billion in 2011

Union Pacific Nets $3.3 Billion in 2011 Union Pacific Corporation (NYSE: UNP) had record earnings both in the fourth quarter of 2011 and for the whole year. For the full year, Union Pacific reported net income of $3.3 billion, or $6.72 per diluted share, up substantially from $2.8 billion, or $5.53 per diluted share, in 2010. Operating revenue reached a record $19.6 billion, versus $17.0 billion in the previous year, and operating income increased 15% to $5.7 billion, up from $5.0 billion in 2010. UP said all six business groups reported freight revenue growth, and five of the six reported volume growth for the year. Overall, carloadings increased 3% versus levels seen in 2010, but intermodal carloads were down 2%. UP’s operating ratio for the full year was 70.7%, slightly higher than the 70.6% record achieved in 2010. The company said higher fuel prices had a 1.7-point negative impact on the operating ratio, as average diesel fuel prices increased 36% over the prior year. For the fourth quarter, the company, whose Union Pacific Railroad operating company serves 23 states, reported net income of $964 million, or $1.99 per diluted share, up 28% compared to $775 million, or $1.56 per diluted share, in the fourth quarter 2010. Volume, as measured by total revenue carloads, grew 3% in comparison to the same period in 2010, with four of six business groups - chemical, automotive, energy, and industrial products - seeing strong volume increases. All groups reported higher revenues; automotive led with a 26%, and the agricultural group lagged, up just 2% (the only group to experience single-digit growth). The operating ratio of 68.3% was a fourth quarter record, 1.9 points better than the record set in the same quarter of 2010. UP also said its Customer Satisfaction Index tied a quarterly best at 92, 2 points better than the fourth quarter of the prior year. Train speed, as reported to the Association of American Railroads, was 25.6 mph, down 3% compared to the fourth quarter of 2010. “The dedicated efforts of our employees, combined with the strength of our diverse railroad franchise, drove record fourth quarter results,” said Jim Young, Union Pacific chairman and CEO, in the company’s [1] announcement. “In 2011, we achieved best-ever marks in customer satisfaction and employee safety, invested a record $3.2 billion in capital, and generated record free cash flow of $1.9 billion. 2011 was the most profitable year in Union Pacific’s history, allowing us to reward shareholders with increased financial returns.”

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