Railroad operator Burlington Northern Santa Fe Corp. (BNI) on Thursday reported a 15.4% year-over-year rise in profit for the second quarter, helped by cost controls and improved yields, despite lower fuel surcharges and a drop in freight revenues amid the economic downturn. Earnings per share for the quarter came in above analysts' expectations, while quarterly operating revenues dropped 26% from last year, and missed consensus estimate.
Association of American Railroads or AAR recently announced that U.S. railroads originated 1.03 million carloads of freight in June 2009, down 19.7% with 255,668 fewer carloads, compared with June 2008. U.S. intermodal rail traffic was down 18.2%, compared to last year with 168,031 fewer trailers and containers. For the second quarter of 2009, total U.S. rail carloadings were down 22.4%, AAR said.
AAR Senior Vice President John Gray, said, "Whenever Americans grow something, eat something, mine something, make something, turn on a light, or get dressed, freight railroads are probably involved somewhere along the line. Unfortunately, right now there's not enough mining, manufacturing and buying going on. So railroads, like most other business sectors, are suffering because of it."
In a statement, president and chief executive officer of the company, Matthew Rose said, "BNSF had another strong quarter of cost control in an extremely difficult economic environment. We are beginning to see BNSF's volumes stabilize in our more economic sensitive businesses, and because of our continued focus on productivity combined with our long-term market opportunities, we are well positioned to benefit when the economy recovers."
Second Quarter Results
The Fort Worth, Texas-based company reported net income of $404 million or $1.18 per share for the second quarter, higher than $350 million or $1.00 per share in the prior year quarter. Net income also surged from $293 million or $0.86 per share in the previous quarter.
The results for the year-ago quarter included a $0.31 per share charge related to environmental matters in Montana.
On average, 17 analysts polled by Thomson Reuters expected the company to earn $1.01 per share for the quarter. Analysts' estimates typically exclude special items.
Total operating revenues for the quarter declined 26% to $3.32 billion from $4.48 billion in the same quarter last year, and missed eight Wall Street analysts' consensus estimate of $3.43 billion. Operating revenues declined marginally from $3.42 billion sequentially.
Peer Performance
Among Burlington's peers, Omaha, Nebraska-based rail transportation provider Union Pacific Corp. (UNP) earlier in the day reported a 12% year-over-year decline in profit for the second quarter to $468 million or $0.92 per share from $531 million or $1.02 per share, as the continued economic woes impacted freight demand. Adjusted net income for the latest quarter was $396 million or $0.78 per share. Quarterly operating revenues dropped 28% to $3.30 billion from $4.57 billion last year.
Another peer, Jacksonville, Florida-based railroad operator CSX Corp. (CSX) last week reported a year-over-year decline in profit for the second quarter to $308 million or $0.78 per share from $385 million or $0.93 per share, hurt by lower volume as well as lower fuel surcharge recovery amid a broad-based weakness in the economy. Quarterly revenues declined 25% to $2.20 billion from $2.91 billion last year, due to a 21% drop in volume and lower fuel surcharge recovery. However, CSX said that there are some signs that the company may be seeing the bottom in many markets, indicating that demand has reached its worst point.
Montreal-based Canadian National Railway Co. (CNI,CNR.TO) reported Monday that second-quarter net income of C$387 million or C$0.82 per share, lower than the previous year's C$459 million or C$0.95 per share, due to the depressed North American and global economies with lower volumes. Quarterly revenues slipped 15% to C$1.781 billion from C$2.098 billion in the prior-year period.
Segmental Details
Burlington's freight revenues for the second quarter declined 26% from a year ago to $3.22 billion, as unit volumes decreased 19% and fuel surcharges reduced about $600 million, partially offset by improved yields. Freight revenues include revenues from consumer products, coal, industrial products and agricultural products.
Consumer Products revenue also dropped 34% to $1.04 billion from the previous year on lower international intermodal, domestic intermodal and automotive volumes amid the economic downturn. Automotive revenues plunged 42.7%, international intermodal revenues dropped 36.6%, and domestic intermodal revenues slipped 29.9%.
Coal revenues for the quarter were $875 million, down 3% from the prior-year quarter as unit volumes remained flat.
Industrial products revenue of $686 million dropped 34.4% from last year on a decline in unit volumes amid lower demand for construction products and building products, partially offset by improved yields.
Agricultural products revenue for the quarter decreased 25.4% to $618 million from the same quarter last year as unit volumes declined, due to reduced domestic loadings and international grain shipments, partially offset by improved yields.
Other Metrics
Operating income for the second quarter increased to $797 million from $714 million in the prior-year quarter. Total operating expenses for the quarter dropped 33% to $2.52 billion from the same quarter last year, driven by strong cost controls, decreased unit volumes and lower fuel prices, which decreased fuel expenses by about $600 million.
Expenses included fuel expenses of $509 million, sharply lower than $1.29 billion in the year-ago quarter, and materials and other expenses of $145 million, down from $410 million last year. Materials and other expenses for the year-ago quarter included $175 million related to environmental matters in Montana.
Capital expenditure for the quarter totaled $620 million, up from $574 million in the same quarter last year. The company ended the second quarter with cash and cash equivalents of $484 million, compared to $481 million at end of the prior-year quarter.
Half Yearly Highlights
For the first six months, the company reported net income of $697 million or $2.03 per share, lower than $805 million or $2.29 per share in the prior-year period.
Total operating revenues for the first six months dropped to $6.74 billion from $8.74 billion in the same period last year.
Stock Quote BNI closed Thursday's regular trading at $79.20, up $2.42 or 3.15%, on a volume of 3.65 million shares. In the past 52 weeks, the stock trended in a broad range of $50.86 to $110.04, with a three-month average volume of 2.79 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.