(The following story by Michael Hooper appeared on The Capital-Journal website on April 30.)
TOPEKA, Kan. — It isn’t just the farmers making money from corn and ethanol.
Railroads like Burlington Northern Santa Fe are making big profits from shipping corn, wheat, ethanol and coal.
Shipments of commodities plus hefty fuel surcharges — designed to stay ahead of escalating diesel fuel prices — helped BNSF post a 17 percent increase in freight revenues during the first three months of the year, compared with revenues over the same period in 2007.
BNSF revenues for the quarter were $4.14 billion, compared with $3.54 billion in the first quarter of 2007, the company announced Tuesday. Over the same period, BNSF earnings were $455 million, or $1.30 a share, up 30 percent from $349 million, or 96 cents a share, a year earlier.
“Anything to do with a commodity is really hot,” Matthew Rose, chairman and chief executive officer of BNSF, said in a conference call with analysts.
BNSF, based in Fort Worth, Texas, employs about 1,000 people in Topeka.
In the latest quarter, BNSF said revenue from shipments of agricultural products was up $240 million, or 38 percent, to $866 million, due to strong growth in shipments of wheat, soybeans, corn and ethanol.
Revenues from shipments of coal rose by $194 million, or 26 percent, to $954 million.
BNSF also saw an 11 percent increase in revenues from shipments of industrial products, but it experienced some declines in lumber shipments due to the weakness in the housing market.
“BNSF achieved record first-quarter results, while demonstrating continued improvement in our velocity and service metrics,” Rose said. “Although we continue to see economic softness within the consumer products business group and commodities related to housing, we are benefiting from our diverse franchise. Looking forward, we continue to be optimistic about the long-term prospects for BNSF and are poised to meet increased demand as the economy strengthens.”
BNSF (NYSE: BNI) shares rose $1.60, or 1.6 percent, to close at $102.72 Tuesday.
Omaha, Neb., billionaire Warren Buffett, chairman of Berkshire Hathaway, had shunned railroads as wise investments for many years, but he changed his tune in the past year, seeing stronger prospects.
The largest shareholder of BNSF stock is Berkshire Hathaway, which owns more than 17 percent of the company.
Last Thursday, Union Pacific Corp. (NYSE: UNP) reported 2008 first-quarter net income of $443 million, or $1.70 per share, compared to $386 million, or $1.41 per share in the first quarter of 2007.