Burlington Northern Santa Fe Corp. (BNI), the second largest U.S. railroad, said Thursday after the markets closed that its fourth quarter profit fell 13% from last year, as freight revenue dropped on lower unit volumes and a decrease in freight surcharges.
The Fort Worth, Texas-based company, which is being acquired by Warren Buffett's Berkshire Hathaway Inc. (BRKA, BRKB), reported net income for the fourth quarter of $536 million or $1.55 per share, compared to $615 million or $1.78 per share for the year-ago quarter.
The latest quarter results include a tax benefit of $0.25 per share related to the fourth quarter donation of a portion of a line segment located in Washington State.
On average, 22 analysts polled by Thomson Reuters expected the company to earn $1.22 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Total operating revenue for the fourth quarter fell 16% to $3.68 billion from $4.37 billion in the same quarter last year. Thirteen analysts had a consensus revenue estimate of $3.62 billion for the fourth quarter.
Freight revenue for the quarter declined to $3.57 billion from $4.25 billion a year earlier, hurt by a 12% decline in unit volumes and a decrease in fuel surcharges of $388 million.
Fourth quarter coal revenues dropped 17% year--over-year to $886 million on lower unit volumes driven by soft demand mainly due to economic conditions, low seasonal burn and weather-related challenges.
Agricultural products revenue for the quarter declined 2% to $822 million, while industrial products revenue slipped 21% to $722 million and consumer products revenues dipped 20% to $1.14 billion.
"We have seen some improvement in volumes during the second half of 2009 and expect this gradual improvement to continue," said Matthew K. Rose, BNSF Chairman, President and Chief Executive Officer.
Operating expenses for the fourth quarter fell 14% to $2.79 billion from $3.26 billion a year ago, mainly due to strong cost controls, decreased unit volumes and lower fuel prices.
For the full year 2009, the company reported net income of $1.72 billion or $5.01 per share, compared to $2.12 billion or $6.06 per share for the full year 2008.
Total revenue for the full year 2009 fell to $14.02 billion from $18.02 billion in the prior year.
BNSF CEO Rose said, "BNSF will continue to position itself to meet demand consistent with the pace of the economic recovery. And as we look forward into 2010, we are preparing to become part of the Berkshire Hathaway family, pending shareholder approval in February."
In early November, Berkshire Hathaway agreed to buy the remaining 77.4% of Burlington Northern Santa Fe that it does not already own for $100 per share in cash and stock. Based on the number of outstanding Burlington shares, including shares currently owned by Berkshire, on Nov. 2, the deal is valued at about $44 billion, including $10 billion of outstanding Burlington debt. The deal has since received U.S. antitrust clearance and is awaiting shareholder approval. Buffett termed the deal as "an all-in wager on the economic future of the United States."
Separately on Thursday, BNSF Railway Co., a subsidiary of Burlington Northern Santa Fe, announced a planned 2010 capital commitment program of $2.4 billion, which is expected to be about $240 million lower than last year due to fewer expected locomotive purchases.
The company currently expects to spend about $2.1 billion for track, signal systems, structures, and freight cars, and to upgrade technologies, including the unfunded mandate for positive train control. The company also expects to acquire 170 locomotives at a cost of about $320 million.
Union Pacific Corp. (UNP), the largest U.S. railroad, earlier Thursday reported a 17% drop in fourth quarter profit, as a decline in freight volumes due to the continued impact of the recession more than offset lower expenses.
Another railroad Railroad operator CSX Corp. (CSX) on Tuesday reported fourth quarter profit that increased 23% from last year, helped by lower expenses, notwithstanding a 13% decline in revenues.
Burlington Northern shares closed Thursday's regular trading session at $99.25, up 2 cents and gained an additional 3 cents in after hours trading.
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