NEW YORK – Booming shipments of coal, grain and fertilizer coupled to improved productivity drove Union Pacific Corp.'s second-quarter earnings up 19 percent, despite the impact of rising fuel costs and Midwest floods.

The nation's largest freight railroad operator also issued a third-quarter earnings prediction above analysts' current views, expecting strong pricing to counter volumes dragged lower by a softening U.S. economy. The Omaha, Neb.-based company also issued a full-year earnings prediction within a range of what Wall Street expected.

The company earned $531 million, or $1.02 per share in the second-quarter, compared with $446 million, or 82 cents per share, a year earlier.

Revenue rose 13 percent to $4.57 billion, from $4.05 billion in the 2007 second quarter.

The results soared past Wall Street's expectations. Analysts polled by Thomson Financial forecast profit of 92 cents per share on revenue of $4.51 billion.

Carloads of agricultural products such as grain rose 11 percent in the quarter. Shipments of energy related products, which include everything from coal to wind turbines, rose 2 percent. Chemical carloads rose 1 percent.

Shipments of industrial products fell 1 percent, reflecting the softening U.S. economy. Intermodal volumes, which involve freight transferred between truck and train, fell 6 percent. But automotive shipments declined by the biggest margin – about 20 percent – because of the struggling U.S. vehicle market.

Total volumes in the quarter dropped by 3 percent.

But the railroad was still able to post higher revenue in five out of six business segments as rates remained strong.

Revenue from shipments of agricultural products jumped 29 percent, and carload revenue for energy-related products jumped 21 percent. Chemical revenue rose 14 percent, while industrial product revenue increased 9 percent. Revenue from intermodal shipments rose 7 percent.

Automotive was the only segment to post lower revenue in the quarter, down 9 percent.

Union Pacific's fuel bill was $1.16 billion, 54 percent higher than the year-earlier quarter. The railroad's average quarterly fuel price was up 64 percent, to $3.60 per gallon, compared with $2.20 in 2007.

“Although high fuel prices and a soft economy present challenges, we remain committed to ongoing productivity and customer service initiatives as we look forward to achieving a record year,” Chairman and Chief Executive Jim Young said in a statement.

In a conference call Thursday, the company said it expects to earn $1.10 to $1.20 per share in the third quarter. Analysts currently predict earnings per share of $1.15 per share, according to Thomson Financial. The company's prediction, which implies growth of about 10 to 20 percent over 2007, is based on carload volumes down 1 percent from the year-ago quarter and diesel prices of about $4 per gallon.

For the full year, the company expects profit of about $4 to $4.20 per share. The forecast is based on total volumes about 1 percent lower than 2007. Analysts expect $4.05 per share.

Before it completed a two-for-one stock split in May, the railroad forecast 2008 earnings of $7.75 to $8.25 per share. That outlook assumed relatively flat shipping volume through the year.

In morning trading, Union Pacific shares rose $1.07 to $78.40.