Union Pacific set second-quarter records, then all but stopped buying back its own stock

Union Pacific returned $26m to shareholders through buybacks in the first half of the year. A year earlier the figure was $2,679m. That is the sentence in Wednesday's release, dated July 23, that says the most, and it sits under a set of second-quarter records.

Net income was $2.0bn, up 6 percent, and diluted earnings per share reached $3.36, up 7 percent from $3.15 a year earlier. Adjusted earnings per share of $3.41 rose 13 percent. Operating revenue of $6.9bn increased 12 percent, driven by higher fuel surcharges, volume growth and core pricing. The railroad said freight revenue, operating revenue, operating income and net income all set records for the quarter.

The reported operating ratio, the share of revenue eaten by operating costs, was 59.7 percent. A higher fuel price pushed it up by 120 basis points, so the underlying trend was better than the headline. Grain and grain-product carloads rose 12 percent.

The buyback near-halt tracks a deal. Union Pacific has a definitive merger agreement to acquire Norfolk Southern, and the release refers throughout to a combined company. Chief executive Jim Vena said the company was ready to move forward in the regulatory process and to deliver what he called America's first transcontinental railroad, offering greater competition and better service. The transaction still needs approval from the Surface Transportation Board.