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Union Pacific reports fuel-surcharge surplus as Norfolk Southern deal review nears
The surplus was about 4% of quarterly net income, and timing effects left results lagging in the first quarter.
Union Pacific reported that in the second quarter it collected $91.1 million more in fuel-surcharge revenue than it paid in fuel cost, based on a Surface Transportation Board filing cited by Yahoo Finance.
Management attributed about $0.14 of EPS, roughly $83.2 million using diluted weighted-average shares, to the net difference between fuel expense and surcharge revenue. The outlet notes this benefit was about 4% of quarterly net income, compared with Norfolk Southern’s $3.6 million surplus and CSX’s $8.4 million.
Yahoo Finance said the fuel-surplus detail is unlikely to change the long-term financial case for Union Pacific, but it could affect the regulatory narrative as the company seeks approval for its proposed $85 billion acquisition of Norfolk Southern.
The report also points to timing, with fuel surcharges using benchmark-linked formulas that can lag fuel movements by about two months, and it cites a first-quarter gap where Union Pacific recovered $34.8 million less than its fuel expense. In the same quarter, Union Pacific revenue rose 12% to $6.9 billion, while freight revenue excluding fuel surcharges increased 4%, with fuel consumption per thousand gross ton-miles improving 1%.