BNSF ratcheted up revenue and income, ratcheted down operating ratio in 2Q

In the second quarter, BNSF Railway Co. ratcheted up revenue and income, ratcheted down operating ratio in 2Q's total revenue rose 5 percent to $5.3 billion, operating income jumped 13 percent to $1.6 billion, net income climbed 12 percent to $884 million and operating ratio improved 1.3 points to 69.8 compared with second-quarter 2012 figures, according to a recently released 2Q performance summary.

Volume increased 4 percent to nearly 2.5 million units, reflecting continued strength in crude oil and domestic intermodal business — which helped offset weak grain traffic — as well as improved yields and mix, the summary states.

By business segment:
• Consumer products volume rose 2 percent to 1.2 million units and revenue increased 3 percent to $1.7 billion primarily because of higher domestic intermodal traffic propelled by highway conversions.
• Industrial products volume jumped 12 percent to 470,000 units and revenue soared 16 percent to $1.4 billion mostly due to strong petroleum products demand.
• Coal volume climbed 7 percent to 519,000 units and revenue grew 8 percent to $1.2 billion as higher natural gas prices and reduced utility stockpiles helped drive carloads.
• Agricultural products volume fell 9 percent to 225,000 units and revenue declined 11 percent to $792 million primarily due to lower grain exports resulting from the extreme U.S. drought in 2012 and strong global competition.

BNSF's operating expenses in the quarter ratcheted up 3 percent year over year to $3.7 billion. Materials and other expenses ballooned 43 percent to $230 million primarily due to higher environmental costs, property taxes, material expenses, and crew transportation and employee relocation costs, the summary states. In addition, compensation and benefits expenses rose 5 percent to $1.1 billion because of higher volumes and inflation.

But purchased services costs were flat at $617 million and fuel costs decreased 2 percent to $1.1 billion as the average price of diesel per gallon dropped 5 percent in the quarter, the summary states.