The Omaha, Neb., railroad earned $1.2 billion net income, or $2.55 per share, in the last three months of 2013. That's up from last year's $1 billion net income, or $2.19 per share.
Revenue improved 7 per cent to $5.63 billion as the railroad increased rates 3.5 per cent and volume grew 2 per cent overall.
Edward Jones analyst Logan Purk said the results show that Union Pacific has more pricing power than other railroads because it has more long-term contracts coming up for renewal.
Analysts surveyed by FactSet expected Union Pacific Corp. to report more modest quarterly earnings per share of $2.49 per share on revenue of $5.57 billion.
Company shares climbed to a new 52-week high of $174.82 after the report. The stock was still up $4.50 at $173 in afternoon trading.
The numbers of cars, chemicals, crops, fuel, lumber and containers of imported goods railroads carry offer investors clues about the health of the nation's economy.
CEO Jack Koraleski said the economy should continue to improve because auto sales, housing construction and manufacturing are predicted to be strong, and it doesn't look like Congress will derail the economy with another fiscal showdown.
"That slow, steady growth feels good to us," Koraleski said.
Agricultural shipments grew 13 per cent thanks to the strong grain harvest. The railroad also delivered 10 per cent more automotive shipments, and hauled 9 per cent more shipments of industrial products.
Weak coal demand has been a challenge for all the major freight railroads, with so many power suppliers switching to cheap natural gas.
Even with the decline in coal shipments, Union Pacific said coal revenue declined only 1 per cent to $985 million because of rate increases.
The railroad repurchased more than 4.9 million shares during the quarter for $786 million reducing the number of shares outstanding by 2 per cent.
Through all of last year, Union Pacific generated $4.4 billion net income, or $9.42 per share, on $22 billion revenue. That was 11 per cent higher than 2012's $3.9 billion net income, or $8.27 per share, on $21 billion revenue.
Union Pacific operates 32,400 miles of track in 23 states from the Midwest to the West and Gulf coasts.
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Union Pacific Corp.: www.up.com