(Reuters) -Union Pacific beat Wall Street estimates for third-quarter profit on Thursday on the back of strong food grain and coal volumes, as well as better pricing.
There is optimism around demand for coal transport, benefiting railroad operators such as Union Pacific, after U.S. President Donald Trump signed executive orders with an aim to boost coal production.
Union Pacific said the results include merger costs of $41 million, or $0.07 per share, on a diluted basis. Shares of the company were down marginally in premarket trade.
Union Pacific announced plans in July to acquire rival Norfolk Southern in an $85 billion deal aimed at creating the first coast-to-coast freight rail operator.
U.S. President Donald Trump’s tariffs have resulted in softer consumer markets and a slowdown in freight, affecting railroads such as Union Pacific.
The deal, still subject to regulatory clearance from the Surface Transportation Board, has drawn a positive response from U.S. President Donald Trump. The companies expect to file merger application with STB by the end of January next year.
The North American railroad industry has struggled with volatile freight volumes, rising labor and fuel costs, and growing pressure from shippers over service reliability.
Revenue from its bulk segment, which includes shipments of coal and food grains, grew 7% to $1.93 billion for the third quarter.
Its intermodal shipments, which involves transporting goods via two or more means of transportation, generated revenue of $1.5 billion, down 3%.
The West Coast railroad operator posted quarterly profit of$3.08 per share, compared with analysts’ estimates of $2.99 per share, according to data compiled by LSEG.
The company posted a total operating revenue of $6.24 billion, compared with estimates of $6.25 billion.
(Reporting by Anshuman Tripathy and Nandan Mandayam in Bengaluru; Editing by Leroy Leo)
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