April 23 (Reuters) – Union Pacific topped Wall Street estimates for first-quarter profit on Thursday, driven by gains from stronger pricing and leaner operations, which helped offset a rise in operating costs.
Shares of the company rose about 1% in premarket trading.
U.S. railroad operators have benefited from precision scheduled railroading over the years, with leaner staffing and higher efficiencies nudging away challenges from freight demand and higher labor and fuel costs.
The results come after Union Pacific signed an $85 billion agreement last year to buy smaller rival Norfolk Southern, a landmark deal to create the first coast-to-coast U.S. freight rail operator.
However, the deal hit a regulatory hurdle in January, when the U.S. Surface Transportation Board sent the deal proposal back for revision due to missing information.
Omaha, Nebraska-based Union Pacific did not provide any update about the deal on Thursday.
Union Pacific’s operating expenses rose 2.8% to $3.76 billion during the quarter, partly driven by a 7% increase in fuel costs.
The company affirmed its annual outlook and said that it is on track to hit those targets.
The West Coast railroad operator’s adjusted profit for the quarter was $2.93, above Wall Street estimates of $2.86, according to data compiled by LSEG.
Total operating revenue for the first-quarter rose 3.2% to $6.22 billion, as analysts’ estimated $6.2 billion.
(Reporting by Apratim Sarkar in Bengaluru; Editing by Leroy Leo)
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