(Bloomberg News circulated the following story by Hugo Miller on January 22, 2009.)
NEW YORK — Burlington Northern Santa Fe Corp., whose largest shareholder is Warren Buffett’s Berkshire Hathaway Inc., passed Union Pacific Corp. last year to become the biggest U.S. railroad by annual sales.
Revenue for the year rose 14 percent to $18.02 billion, led by gains from coal and agricultural products, Fort Worth, Texas- based Burlington Northern said yesterday. Union Pacific today reported a 10 percent increase to $17.97 billion.
“It’s just bragging rights. If this was 2006 or 2012 then I can see the champagne popping in Fort Worth,” said Tony Hatch, an independent rail analyst based in New York. “It’s more important to look at what happens with the two not among shrinking volumes, but when the economy is strong again.”
Burlington Northern and Union Pacific both boosted profit and sales last year as they raised rates while hauling less freight. With cargo volumes not expected to recover before mid- 2009, the companies plan to focus on controlling expenses.
This year will be “very tough,” Union Pacific Chief Executive Officer Jim Young told analysts today on an earnings conference call. “Our concentration now is efficiency, getting costs out.”
Revenue comparisons are “not relevant to me,” Young said in an interview after the call. “What’s relevant is the financial returns and the performance of the company, safety and service.”
Union Pacific, based in Omaha, Nebraska, reported 2008 net income of $2.34 billion, compared with earnings of $2.12 billion for Burlington Northern. Profit rose 26 percent at Union Pacific and 16 percent at Burlington Northern.
Patrick Hiatte, a spokesman for Burlington Northern, didn’t immediately return a call seeking comment about the company passing Union Pacific in annual revenue.
Buffett Stakes
Buffett’s Berkshire Hathaway, which also is based in Omaha, owns 74.5 million shares of Burlington Northern, or 22 percent of those outstanding, according to data compiled by Bloomberg. Berkshire Hathaway also has a Union Pacific stake of 8.91 million shares, or 1.8 percent, according to Bloomberg data.
Union Pacific rose $2.73, or 6.7 percent, to $43.25 at 4 p.m. in New York Stock Exchange composite trading. The shares fell 24 percent during 2008.
Burlington Northern slid $1.12, or 1.7 percent, to $64.47. Last year, the stock dropped 9 percent.