BNSF 3Q Net Income Rises 12%, Best Among US Rails

BNSF Railway, which is owned by investor Warren Buffett’s Berkshire Hathaway Inc., raised third-quarter net income 12% to $1.16 billion, which was the best earnings growth among the largest U.S. railroads.

The railway’s results included stronger consumer products freight such as truck-rail shipments, as well as grain and coal cargo increases. The results were disclosed in a Securities and Exchange Commission filing earlier this month that is made because some of the railroad’s debt is held by the public.

BNSF revenue was an industry-leading $5.6 billion, but it was down 5% year-over-year. Expenses fell 13%, resulting in an operating ratio of 61.8, an improvement of 5.8 percentage points. Profit before interest and taxes was $2.09 billion, also a 12% increase.

By comparison, net income declined at Norfolk Southern Corp., Union Pacific Corp. and Kansas City Southern and rose less than 1% at CSX Corp., the companies announced last month.

Industrial products shipments fell 9% “primarily due to the impact of lower crude prices on petroleum products and frac sand demand. In addition, there was lower demand for steel products.”

The increase in the consumer products group was “primarily due to increased demand,” the statement said. Truck-rail shipment volume wasn’t disclosed.

Coal volumes rose 5% in the quarter and 4% over nine months. Agricultural products freight climbed 11% for the quarter and is 7% higher over nine months, also due to higher demand.

The Fort Worth, Texas-based railroad stated that shipments rose 3% in the third quarter and are 1% higher for the first nine month of 2015. Including fuel surcharges, revenue per shipment was 8% lower for the quarter and down 5% for the first three quarters.