(The following article by Dan Piller was posted on the Fort Worth Star-Telegram website on July 27.)
FORT WORTH, Texas — Boosted by 15 percent growth in freight revenue, Burlington Northern Santa Fe Corp. on Tuesday reported second-quarter profit of $366 million, or 96 cents per share, up 47 percent from a year ago.
Big increases in shipments of Asian imports and American grain helped the Fort Worth-based carrier to beat the Wall Street consensus expectation of 93 cents per share. BNSF earned $249 million, or 67 cents per share, in the second quarter of 2004. Revenue jumped 17 percent to $3.14 billion from $2.69 billion.
BNSF had signaled confidence in its earning power with an 18 percent increase in its dividend last week, to 20 cents per share on common stock.
“We were happy with the quarter, particularly since it compared to a strong second quarter last year,” BNSF Chairman Matt Rose said.
The railroad has boosted prices on about two-thirds of its business as long-term contracts expire. BNSF’s marketing vice president, John Lanigan, said the carrier has “zero tolerance” on exceptions from higher rates to cover rising fuel costs. The railroad paid an average of $1.68 per gallon for fuel during the second quarter, up from $1.25 per gallon a year earlier.
The higher rates enabled BNSF to record an increase of 15 percent in freight revenues on volume growth of 4 percent.
The railroad shipped record volumes of industrial products and consumer goods during the quarter. As in recent quarters, international shipments from Asia through California ports rose by 24 percent. A hot housing market boosted building products volumes by 12 percent.
BNSF trains averaged 122.2 cars during the quarter, up from 116.8 cars in the same quarter last year.
The only fly in BNSF’s ointment was the condition of its track in the Powder River Basin in Wyoming caused by winter thaw, flooding and coal dust. Even so, BNSF’s coal volumes rose by 6 percent in the quarter on strong demand as utilities battle high natural gas costs.
Analyst James Valentine of Morgan Stanley called BNSF’s performance “very impressive.”
BNSF stock (ticker: BNI) rose 27 cents to $51.27. Rose said he expects the railroad to earn between $3.80 and $3.90 per share for all of 2005.