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7/22/2003



Rail News: BNSF Railway

2Q financials: For BNSF, higher fuel costs offset revenue increase


If Burlington Northern Santa Fe's second-quarter earnings statement is any indication, the high cost of fuel likely will continue to put a damper on Class Is' revenue-development progress.

For the quarter, BNSF posted freight revenues of $2.26 billion, a 3.7 percent increase compared with the $2.18 billion recorded for the same 2002 period. Freight revenues include increased fuel surcharges of $24 million compared with the same period last year. The Class I recorded net income of $200 million, a 3.1 percent increase compared with the same 2002 period.

But BNSF also recorded operating expenses of $1.88 billion, a 5 percent increase compared with the same 2002 period primarily due to higher fuel costs and volumes handled. The result: The railroad reported operating income of $412 million, a 2.1 percent decline compared with the same 2002 period.

"Strong international volumes led BNSF to having overall revenue growth for the second-consecutive quarter," said Chairman, President and Chief Executive Officer Matthew Rose in a July 22 prepared statement. "However, our bottom line continues to be impacted because of a 27 percent increase in fuel expense year-over-year."

Nevertheless, the BNSF revenue story's still a relatively good one. Consumer products revenue increased 7 percent to $911 million — a reflection of growth in international, truckload and perishable sectors, BNSF says. Coal revenue increased 3 percent to $504 million, primarily due to index-driven rate increases. Agricultural products revenue grew 2 percent to $317 million. One reason: The railroad handled more ethanol shipments. And industrial products revenue declined 1 percent to $531 million, as growth in the building and construction products sectors offset weak demand in the chemical and petroleum products sectors.





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