(The following story by Dan Piller appeared on the Fort Worth Star-Telegram website on October 26.)
FORT WORTH, Texas — Burlington Northern Santa Fe said Tuesday that strong demand produced record revenues in the third quarter, but net income was squeezed due to environmental cleanup costs.
Quarterly net income declined from $203 million last year to $2 million as the Fort Worth-based carrier took a one-time charge of $288 million to cover anticipated costs for asbestos and environmental cleanup work.
Record demand for rail service and higher prices helped BNSF log record revenues of $2.8 billion, up 16 percent.
The environmental charge took all but 1 cent from the 76 cents per share earned from operations, BNSF said. A year ago, earnings per share totaled 55 cents.
BNSF enjoyed double-digit surges in volumes in its coal, intermodal, industrial and consumer products segments. The railroad is also handling 27 percent more import business from Asia through the port of Los Angeles.
BNSF Chairman and Chief Executive Matthew Rose and other executives noted that the railroad has a newfound ability to boost rates and add fuel surcharges. Truck shipments have become less competitive due to high fuel costs.
“We are seeing some contracts with rate increases in the 5-7 percent range,” said Rose.
Analyst Tom Wadewitz of Bear Stearns noted that “BNSF’s pricing momentum seems to be very strong.”
Despite an 11 percent increase in shipment volumes, BNSF has avoided the service delays and congestion that cut profits at rival Union Pacific Railroad.