(Reuters) - Union Pacific Corp (UNP.N) on Thursday reported a better-than-expected profit as higher freight revenue offset the impact of Hurricane Harvey which battered the No. 1 U.S. railroad’s network in southeast Texas in August.
The company’s shares rose more than 3 percent in early trading after the earnings release.
“During the quarter, our company faced the unprecedented challenge of Hurricane Harvey,” Union Pacific Chief Executive Lance Fritz said in a statement, thanking the railroad’s workers for quickly restoring the network.
The Omaha, Nebraska railroad company said that 2,400 miles (3,862 km) of its network were affected by the storm, which flooded the region around Houston, inundating rail track and yards, and washing away bridges.
The railroad said that it expects freight volumes to be up slightly in the fourth quarter versus the same period in 2016.
Union Pacific executives told analysts on a conference call that tight capacity and rising freight rates in the trucking sector could help the railroad pick up extra business in 2018.
Fritz said that freights hauls over 500 miles “represent a good opportunity for us” versus trucking firms.
Freight revenue jumped 4 percent in the third quarter compared with the year-ago period, driven largely by a 15 percent increase in industrial product volumes and despite an overall 1 percent decrease in freight volumes.
Union Pacific said third-quarter net income rose to $1.19 billion, or $1.50 per share, from $1.13 billion or $1.36 per share, a year earlier.
Analysts on average expected earnings of $1.49 per share, on revenue of $5.3 billion, according to Thomson Reuters I/B/E/S.
The company said Hurricane Harvey had reduced earnings per share by 4 cents.
Third-quarter operating revenue rose to $5.41 billion from $5.17 billion.
Union Pacific reported a quarterly operating ratio - a measure of operating expenses as a percentage of revenue and a key metric for Wall Street - of 62.8 percent, a rise of 0.7 points compared with the same period last year.
A lower operating ratio means better efficiently and higher profitability.
Union Pacific shares were up 3.2 percent at $113.82 on the New York Stock Exchange.
Reporting by Rachit Vats in Bengaluru, and Eric Johnson in Seattle; Editing by Supriya Kurane and Susan Thomas