BNSF posts Q2 revenue, earnings increases on higher volumes

BNSF Railway Co. reported revenue jumped 14.5 percent to $5.3 billion on higher volumes and increased average revenue per car during the second quarter compared with the same period a year ago.

BNSF's pretax net earnings rose 24 percent to $1.5 billion in Q2 2017 compared with the same period in 2016, according to the second-quarter earnings report of BNSF's parent company, Berkshire Hathaway Inc.

After tax net income for the second quarter was $958 million, compared with $772 million in the year-ago period.

For the first half of this year, BNSF's revenue increased 11.6 percent to $10.4 billion, while pre-tax earnings rose 15.5 percent to $2.9 billion compared with the same period a year ago.

"In the first six months of 2017, revenues reflected a 4.1 percent comparative increase in average revenue per car/unit and a 7.6 percent increase in volume," BNSF's report stated, noting a year-to-date volume of 5 million cars/units.

Freight revenue from coal during the second quarter soared 39.2 percent to $912 million on a 20.7 percent increase in volume, as well as higher average revenue per car/unit compared with last year. For the six months, coal volumes were up 19.5 percent.

"The [coal] volume increases in 2017 were due to mild winter weather in the first quarter of 2016 and higher natural gas prices in the first half of 2017," BNSF reported. "Together, these factors led to increased utility coal usage in 2017, which were partly offset by the effects of unit retirements of coal generating utilities."

Also increasing during the quarter compared with Q2 2016 was freight revenue from consumer products, up 8.4 percent to $1.7 billion; industrial products, up 7.4 percent to $1.3 billion; and agricultural products, up 18 percent to $1.1 billion.

For the six-month period 2017 compared with a year ago, consumer products revenue rose 8.6 percent to $3.4 billion; industrial products revenue grew 5.7 percent to $2.5 billion; and agricultural products revenue increased 11.4 percent to $2.2 billion.

For the second half of 2017, BNSF expects overall volume growth will moderate compared with the first six months of the year.

Operating expenses in the second quarter and first six months of 2017 were $3.5 billion (up 11.6 percent) and $7 billion (up 10.7 percent), respectively, compared with the same periods in 2016.

BNSF posted an operating ratio of 65.8 percent in the second quarter, a decrease of 1.7 percentage points compared with last year. For the first six months of 2017, BNSF's operating ratio was 67.5 percent, down 0.5 percentage points compared with 2016's first half.