BNSF First-Quarter Net Income Drops 24%, Hurt by Coal Shipment Drop-Off
BNSF Railway reported a 24% drop in first-quarter net income tied to a sharp decline in coal shipments that also has afflicted other U.S. railroads.
The company owned by Berkshire Hathaway did report some positive trends, including a rise of about 9% in intermodal and automotive shipments at the Consumer Products unit. Revenue from that business rose to $1.54 billion, an increase of nearly 3%. Revenue per shipment for that freight was about 5% lower at $1,255. Nearly all of the consumer products cargo is truck-rail freight since the company reported 1.21 million intermodal units moved for the 13 weeks ended April 2 in statistics published on the railroad’s website.
The earnings announcement, the last among the seven largest North American railroads, follows a mixture of improved and lowered earnings for the industry. Western competitor Union Pacific Railroad’s net income slipped 15% to $979 million on revenue of $4.83 billion.
BNSF revenue declined 15% to $4.64 billion.
“The decline in revenue is primarily due to a 5.5% decline in unit volume and lower fuel surcharge revenue driven primarily by lower fuel prices,” Fort Worth, Texas-based BNSF said in a Securities and Exchange Commission filing. The filing is required because the railroad still has publicly traded debt.
International intermodal volumes helped the railroad boost that business after lower year-earlier activity tied to West Coast port disruptions.
Coal shipments fell more than 30%. Fewer oil-related shipments cut industrial products freight by 9%, but agricultural products shipments rose 1% due to increased ethanol and soybean cargo.
The railroad also said it has shaved an additional $150 million from its 2016 capital spending plan, which now will be about $4.15 billion, a drop of about 25% from last year.
