Union Pacific’s $158-Million Loss Is Greater Than Expected

Union Pacific Corp. reported a larger-than-expected loss for the second quarter on Thursday, but the nation’s largest railroad said it finally may be recovering from a logjam that has crippled operations for more than a year.

Union Pacific lost $158 million, or 64 cents a share, from continuing operations, compared with net income of $216 million, or 87 cents, in the year-earlier period. Analysts had expected a loss of 17 cents a share, the average estimate in a First Call survey. Revenue fell 11% to $2.36 billion.

The bulk of the company’s third straight quarterly loss came from $155 million, or 63 cents a share, the company is setting aside to pay customers hurt by the congestion. Excluding that reserve, results would have approached break-even, it said.

“There’s no question that those are terrifically disappointing numbers no matter how you slice it,” Chairman and Chief Executive Richard Davidson said in a conference call.

The Dallas-based company hadn’t previously disclosed the costs of shipper claims, which stem from lost and delayed shipments. Davidson noted that most of the largest claims have been resolved and that some will be litigated.

Service problems related to the congestion reduced earnings by $434 million, or $1.76 a share.

“We did make progress with our operations on many fronts during the past months, and we believe those efforts are going to bear fruit in the months ahead,” Davidson said.

The company said congestion is largely cleared in the Gulf Coast area and a backup in Nebraska should improve in September. Trains are still backed up in Southern California, however.

Union Pacific shares rose 6 cents to close at $42.25 after falling to a 52-week low of $41.06 on the New York Stock Exchange.