Industry News

Burlington Northern 3Q Profit Falls

October 23, 2009 | 09:15 a.m. CDT

Burlington Northern Santa Fe Corporation Oct. 22 reported quarterly earnings of $1.42 per diluted share, which included a $0.06 per share impact related to a favorable coal rate case adjustment. This compared to third-quarter 2008 earnings of $1.99 per diluted share.

Third-quarter 2009 freight revenues decreased $1.28 billion, or 27 percent, to $3.49 billion compared with $4.77 billion in the prior year. The 27 percent decrease in revenues included a decrease in fuel surcharges of $725 million. The remaining variance was due to 17 percent lower unit volumes as a result of the economic downturn, partially offset by improved yields.

• Coal revenues were down $107 million, or 10 percent, to $940 million on lower unit volumes driven by soft demand due to economic conditions and mild summer weather, partially offset by a favorable coal rate case adjustment and improved yields.
• Agricultural Products revenues declined $194 million, or 21 percent, to $715 million on lower unit volumes predominately driven by reduced domestic loadings and international grain shipments.
• Industrial Products revenues of $747 million were $377 million, or 34 percent lower than the third quarter of 2008, due primarily to lower unit volumes, driven by lower demand for construction and building products, partially offset by improved yields.
• Consumer Products revenues decreased $599 million, or 36 percent, to $1.09 billion, on lower international intermodal, domestic intermodal and automotive volumes due to economic conditions. Revenue was also impacted in each of the business units because of lower fuel surcharges.

Operating expenses for the third quarter of 2009 declined $1.01 billion, or 27 percent, to $2.69 billion, compared with third-quarter 2008 operating expenses of $3.70 billion. About half of the $1.01 billion reduction was due to lower fuel prices, with the remainder due to strong cost controls and decreased unit volumes. BNSF reported a third quarter '09 operating ratio of 74.2 percent.

"During the recession, BNSF has demonstrated significant operating leverage through ongoing dedication to controlling costs and productivity improvements," said Matthew K. Rose, BNSF chairman, president and chief executive officer. "The combination of our significant operating leverage and long-term market opportunities places BNSF in a strong position when the economy recovers."