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Researched by Industrial Info Resources (Sugar Land, Texas)--Executives with Union Pacific Railroad (NYSE:UNP) (Omaha, Nebraska) and Canadian Pacific Railway (NYSE:CP) (Calgary, Canada) each reported profit gains in fourth-quarter 2014 from a year earlier amid substantial revenue growth, but were keeping an eye on the potential impact of falling oil prices on crude-by-rail shipments.
Union Pacific said its fourth-quarter net income increased nearly 17% to $1.4 billion, while Canadian Pacific reported 451 million Canadian dollars ($365 million) in net income, compared with C$82 million ($66 million) in fourth-quarter 2013.
Industrial Info is tracking 47 Union Pacific projects worth $3.36 billion, and 24 Canadian Pacific projects worth $1.19 billion.
Union Pacific, which operates in 23 states in the western two-thirds of the country, reported fourth-quarter operating revenue of $6.2 billion, up 9% from the 2013 fourth quarter. Revenues from industrial products shipments rose 15%; intermodal traffic revenue rose 11%; coal rose 9%; and agricultural products revenue rose 9%, the railroad reported. Total shipments by carload rose 6% to 2.4 million.
For all of fiscal year 2014, Union Pacific said net income totaled $5.2 billion, up 18% from 2013. Operating revenue in 2014 totaled $8.8 billion, an 18% increase from 2013.
Union Pacific's capital expenditures program totaled $4.1 billion in 2014, an increase of $500 million over 2013. Company executives said during the company earnings conference call that capital expenditures are likely to increase in 2015, as the railroad plans to buy 218 more locomotives and invest in key infrastructure projects.
The railroad managed to avoid falling revenues from a drop-off in oilfield activity, due to lower oil prices, executives said. Eric Butler, executive vice president of marketing and sales, said during the earnings conference call that fourth-quarter crude volume by train rose 7% from a year earlier. He said an increase in oil volumes from the Uinta Basin and Niobrara Shale region offset lower volume from the Bakken Shale play.
Looking forward, however, Butler said, "We think that crude oil will be a headwind throughout the year."
The oil market also may likely impact frac sand shipments, which rose 38% in the fourth quarter, Butler said.
Union Pacific Chief Executive Officer Jack Koraleski said lower oil prices could pose both challenges and opportunities.
"Lower energy prices could slow the shale-related domestic energy boom, depending on how low they go and how long they stay there," Koraleski said. "On the other hand, lower gasoline prices could spur auto sales and help strengthen the consumer economy, which would create opportunities in our other markets."
The largest Union Pacific project being tracked by Industrial Info is the $400 million grassroot rail switching and classification yard in Hearne, Texas. Union Pacific and HDR Engineering Incorporated (Omaha, Nebraska) are conducting preliminary design for the project, which would be located on a 700-acre site 22 miles north of College Station. The rail yard would allow Union Pacific to sort cars where seven of its lines cross, serving the Houston, Dallas, Austin and San Antonio areas, as well as spots along the Gulf of Mexico and throughout east Texas. Kick-off is slated for third quarter 2015, with completion in first-quarter 2017.
Meanwhile, Canadian Pacific reported fourth-quarter revenues rose 10% to C$1.76 billion ($1.43 billion) from a year earlier. Revenue from Canadian grain shipments rose 2% to C$267 million ($216 million), while domestic intermodal revenue rose 20% to C$208 million ($168 million). The railway said it also saw substantial revenue gains in coal, potash, crude oil, metals, minerals and chemicals shipments. Total carloads for the fourth quarter rose 4% to 690,000.
For all of fiscal year 2014, net income totaled C$1.47 billion ($1.19 billion), nearly 70% higher than in 2013. Revenues rose 8% to C$6.62 billion ($5.36 billion).
Canadian Pacific President Keith Kreel said during the company's earnings conference call that as a result of falling oil prices, the railroad has lowered the amount of crude oil that it expects to haul during first-quarter 2015 to 140,000 car loads from 200,000 car loads. Revenues from hauling crude oil in 2014 totaled C$484 million ($392 million), up 29% from 2013.
The company said it expects to make CA$1.5 billion ($1.2 billion) in capital expenditures for 2015. Canadian Pacific operates rail services from Montreal to Vancouver in Canada, and it serves several northern U.S. cities.
With a total investment value of $400 million, the Detroit/Windsor Replacement Rail Tunnel is the largest Canadian Pacific project being tracked by Industrial Info. The Continental Rail Gateway Coalition, with construction services firm MMM Group Limited (Toronto, Canada), are seeking permits for a new 1.6-mile tunnel to replace the existing 100-year-old tunnel between Detroit, Michigan, and Windsor, Ontario. The new high-clearance tunnel would accommodate double-stacked containers and multilevel rail cars. The Continental Rail Gateway Coalition consists of the Windsor Port Authority, Borealis Infrastructure (a division of the Ontario Municipal Employees Retirement System) and Canadian Pacific Railway. The tunnel currently carries about 350,000 rail cars each year. The project is scheduled to kick off in the second quarter of 2015, with completion by the end of 2016, according to Industrial Info.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Union Pacific said its fourth-quarter net income increased nearly 17% to $1.4 billion, while Canadian Pacific reported 451 million Canadian dollars ($365 million) in net income, compared with C$82 million ($66 million) in fourth-quarter 2013.
Industrial Info is tracking 47 Union Pacific projects worth $3.36 billion, and 24 Canadian Pacific projects worth $1.19 billion.
Union Pacific, which operates in 23 states in the western two-thirds of the country, reported fourth-quarter operating revenue of $6.2 billion, up 9% from the 2013 fourth quarter. Revenues from industrial products shipments rose 15%; intermodal traffic revenue rose 11%; coal rose 9%; and agricultural products revenue rose 9%, the railroad reported. Total shipments by carload rose 6% to 2.4 million.
For all of fiscal year 2014, Union Pacific said net income totaled $5.2 billion, up 18% from 2013. Operating revenue in 2014 totaled $8.8 billion, an 18% increase from 2013.
Union Pacific's capital expenditures program totaled $4.1 billion in 2014, an increase of $500 million over 2013. Company executives said during the company earnings conference call that capital expenditures are likely to increase in 2015, as the railroad plans to buy 218 more locomotives and invest in key infrastructure projects.
The railroad managed to avoid falling revenues from a drop-off in oilfield activity, due to lower oil prices, executives said. Eric Butler, executive vice president of marketing and sales, said during the earnings conference call that fourth-quarter crude volume by train rose 7% from a year earlier. He said an increase in oil volumes from the Uinta Basin and Niobrara Shale region offset lower volume from the Bakken Shale play.
Looking forward, however, Butler said, "We think that crude oil will be a headwind throughout the year."
The oil market also may likely impact frac sand shipments, which rose 38% in the fourth quarter, Butler said.
Union Pacific Chief Executive Officer Jack Koraleski said lower oil prices could pose both challenges and opportunities.
"Lower energy prices could slow the shale-related domestic energy boom, depending on how low they go and how long they stay there," Koraleski said. "On the other hand, lower gasoline prices could spur auto sales and help strengthen the consumer economy, which would create opportunities in our other markets."
The largest Union Pacific project being tracked by Industrial Info is the $400 million grassroot rail switching and classification yard in Hearne, Texas. Union Pacific and HDR Engineering Incorporated (Omaha, Nebraska) are conducting preliminary design for the project, which would be located on a 700-acre site 22 miles north of College Station. The rail yard would allow Union Pacific to sort cars where seven of its lines cross, serving the Houston, Dallas, Austin and San Antonio areas, as well as spots along the Gulf of Mexico and throughout east Texas. Kick-off is slated for third quarter 2015, with completion in first-quarter 2017.
Meanwhile, Canadian Pacific reported fourth-quarter revenues rose 10% to C$1.76 billion ($1.43 billion) from a year earlier. Revenue from Canadian grain shipments rose 2% to C$267 million ($216 million), while domestic intermodal revenue rose 20% to C$208 million ($168 million). The railway said it also saw substantial revenue gains in coal, potash, crude oil, metals, minerals and chemicals shipments. Total carloads for the fourth quarter rose 4% to 690,000.
For all of fiscal year 2014, net income totaled C$1.47 billion ($1.19 billion), nearly 70% higher than in 2013. Revenues rose 8% to C$6.62 billion ($5.36 billion).
Canadian Pacific President Keith Kreel said during the company's earnings conference call that as a result of falling oil prices, the railroad has lowered the amount of crude oil that it expects to haul during first-quarter 2015 to 140,000 car loads from 200,000 car loads. Revenues from hauling crude oil in 2014 totaled C$484 million ($392 million), up 29% from 2013.
The company said it expects to make CA$1.5 billion ($1.2 billion) in capital expenditures for 2015. Canadian Pacific operates rail services from Montreal to Vancouver in Canada, and it serves several northern U.S. cities.
With a total investment value of $400 million, the Detroit/Windsor Replacement Rail Tunnel is the largest Canadian Pacific project being tracked by Industrial Info. The Continental Rail Gateway Coalition, with construction services firm MMM Group Limited (Toronto, Canada), are seeking permits for a new 1.6-mile tunnel to replace the existing 100-year-old tunnel between Detroit, Michigan, and Windsor, Ontario. The new high-clearance tunnel would accommodate double-stacked containers and multilevel rail cars. The Continental Rail Gateway Coalition consists of the Windsor Port Authority, Borealis Infrastructure (a division of the Ontario Municipal Employees Retirement System) and Canadian Pacific Railway. The tunnel currently carries about 350,000 rail cars each year. The project is scheduled to kick off in the second quarter of 2015, with completion by the end of 2016, according to Industrial Info.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
