(The New York Times online posted the following Reuters article on its website on April 22.)
MIAMI — Burlington Northern Santa Fe (BNI.N), the No. 2 U.S. railroad, said on Tuesday first-quarter earnings were ravaged by high fuel prices but still rose on an accounting change.
Excluding the one-time accounting adjustment, earnings fell as the company battled a $90 million surge in fuel prices and winter storms that slowed shipments and harried operations.
The Fort Worth, Texas, railroad, with lines crisscrossing the western United States, said first-quarter profit was $187 million, or 50 cents a share, up from $172 million, or 45 cents a share, the year before.
Excluding the accounting change, earnings would have dipped to $148 million, or 40 cents per share. On that basis, Wall Street had expected Burlington to earn between 37 cents and 41 cents a share, with an average of 39 cents, according to 11 analysts surveyed by Thomson First Call.
Quarterly freight revenues rose 3 percent to $2.2 billion, despite a 5 percent decline in coal transport, a key category, which was off $23 million to $485 million, according to a company news release. Agricultural shipments were also off, bringing in $358 million, or $3 million less than during early 2002.
But shipments of consumer products rose 9 percent, or $70 million, to $848 million, as cross-border, truckload and perishable cargoes picked up. Burlington also said it had picked up extra military, construction and waste shipments, which helped lift industrial revenues $20 million to $511 million.
Operating income declined to $346 million in the quarter from $380 million a year earlier as operating expenses rose $103 million to $1.89 billion. Fuel cost the railroad $274 million in the quarter, up from $184 million a year earlier.
The company’s operating ratio, a measure of efficiency, rose to 84.3 percent in January, February and March from 82.2 percent a year earlier.
Truckers, railroads and other cargo haulers have all reported increased costs and some lost business because of snowstorms and other harsh winter weather in much of North America early this year.
“Excluding the impact of higher fuel prices, our operating expenses were essentially flat and the operating ratio would have been approximately 1 point lower than the first quarter of the prior year,” Chief Executive Officer Matthew Rose said.
Rose said the company was optimistic about the rest of the year. “We believe revenue growth will continue this year along with earnings growth even though the outlook for certain segments of the U.S. economy continues to be cloudy,” he said.
Burlington shares fell 16 cents to $27.10 early Tuesday on the New York Stock Exchange. The shares had risen 4 percent during the six months through Monday while the Dow Jones Railroads Index (.DJUSRR) has been flat.