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Rail News: BNSF Railway

BNSF registers record fourth-quarter earnings, income


Burlington Northern Santa Fe Corp. capped off 2006 with a strong financial performance in the fourth quarter, and a few records to boot. Earnings per diluted share increased 26 percent to a record $1.42 and operating income rose 18 percent to an all-time-high $942 million compared with fourth-quarter 2005 data.

In addition, record Powder River Basin coal volume helped drive up fourth-quarter traffic 4 percent to 2.7 million units — the Class I’s 19th-straight quarter of year-over-year volume increases.

A 22 percent jump in coal revenue to $775 million also helped BNSF boost quarterly revenue 9 percent to $3.8 billion compared with fourth-quarter 2005 data. Agricultural products revenue increased 9 percent to $646 million, consumer products revenue rose 6 percent to $1.5 billion and industrial products revenue went up 6 percent to $885 million. Quarterly revenue included fuel surcharges of $450 million compared with $400 million in fourth-quarter 2005.

BNSF also posted a quarterly operating ratio of 75, a 1.8-point improvement compared with fourth-quarter 2005’s ratio.

“The ratio would have been under 72 if you exclude the impact of fuel surcharges on revenue and expenses,” said BNSF Chairman, President and Chief Executive Officer Matthew Rose during the railroad’s quarterly earnings conference this morning.

However, fourth-quarter operating expenses of $2.9 billion increased 7 percent primarily because of a $96 million increase in fuel costs.

For the year, BNSF’s revenue increased 15 percent to $15 billion, operating income rose 2 percent to $3.5 billion, earnings per diluted share jumped 25 percent to $5.10 and operating ratio improved 1 point to 75.8 compared with 2005 data.

In 2007, freight-rail transportation demand will remain strong, helping to continue driving revenue and earning increases, said Rose.

Also on tap for 2007: increased capital spending. Because BNSF’s return on invested capital reached a record 11.4 percent last year, the railroad will boost spending to $2.75 billion compared with $2.6 billion in 2006.

The budget includes more than $1.6 billion to upgrade track, and signal systems, expand capacity, acquire rolling stock — including 200 leased locomotives — and implement new technologies. Capacity expansion projects include double- and triple-tracking 40 track miles across New Mexico’s Abo Canyon; building 60 miles of third and fourth main track on the PRB joint line, and 50 miles of double track in Nebraska and Wyoming; and expanding intermodal terminals in Chicago, Los Angeles, Seattle, Alliance, Texas, Memphis, Tenn., and Stockton, Calif.

Contact Progressive Railroading editorial staff.

More News from 1/23/2007