BNSF Railway profit surges on traffic growth and coal volume and revenue gains

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FORT WORTH, Texas — BNSF Railway’s second-quarter profit climbed 24 percent amid broad traffic growth and increased revenue per carload, particularly for coal shipments.

BNSF’s revenue was up 15 percent, to $5.2 billion, the railroad’s parent company, Berkshire Hathaway, reported in a regulatory filing on Friday. Net earnings were $958 million, up from $772 million a year ago. The railroad’s operating ratio was 65 percent, a 1.7-point improvement versus the second quarter of 2016.

BNSF reported across-the-board gains in traffic for the quarter, with coal leading the way.

Coal volume was up 21 percent for the quarter, but coal revenue rose 39 percent thanks to a 15-percent increase in average revenue per carload. BNSF attributed the higher volumes to mild winter weather a year ago and higher natural gas prices this year.

“Together, these factors led to increased utility coal usage in 2017, which were partly offset by the effects of unit retirements of coal generating facilities,” BNSF officials said.

Volume was up 5.8 percent in consumer products, which includes intermodal.

“The volume increases were primarily attributable to higher market share, improving economic conditions, and normalizing of retail inventories, which benefited domestic intermodal, international intermodal and automotive volumes,” Berkshire Hathaway said in its filing.

Industrial products volume was up 4.1 percent as frac sand, steel, and other commodities that support increased oil and gas drilling helped offset losses in petroleum products and plastics.

Agricultural products shipments grew 14.5 percent in the quarter due to higher grain exports.

BNSF said it expects traffic growth to moderate in the second half of the year.

The railroad will spend $3.4 billion to maintain and expand its network this year. Some $2.4 billion will go toward basic maintenance and renewal programs. An additional $400 million will go toward expansion projects, while $200 million will be spent to install positive train control systems. BNSF will spend $400 million on locomotives, freight cars, and other equipment acquisitions.

NEWSWIRETrains News Wire

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