BNSF Railway's quarterly revenue and profit rise despite traffic slump

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FORT WORTH, Texas — BNSF Railway reported higher second quarter profits on Friday despite a traffic slump and disruptive Midwestern flooding.

BNSF’s pre-tax profit rose 7%, to $1.8 billion, as revenue rose 0.3%, to $5.9 billion, corporate parent Berkshire Hathaway reported in a regulatory filing. The railroad’s operating ratio improved 2.1 points to 65.4% for the quarter.

For the first half of the year, rates were up 6.3% as overall volume declined 4.5%.

“BNSF experienced severe winter weather and flooding on parts of the network in the first half of 2019, which negatively affected revenues, expenses, and service levels,” Berkshire Hathaway said.

But the railroad reported lower expenses thanks to lower volume-related costs, reduced fuel prices, and the effects of cost-cutting initiatives.

Quarterly revenue for consumer products, which includes intermodal and automotive traffic, declined 3.8% to $1.9 billion, reflecting higher rates on volume that was 6.3% lower than the same period a year ago.

“The volume decreases were driven by reduced consumer demand and higher available truck capacity, as well as from lower international intermodal market share and decreased imports,” BNSF said.

Industrial products revenue rose 6.4% to $1.6 billion on flat volume.

“Volume changes were primarily due to strength in the energy sector, which drove higher demand for petroleum products and liquefied petroleum gas, offset by lower sand volumes and reduced car loadings due to the challenging weather conditions in 2019,” the railway said.

Agricultural products revenue rose 3.3% with rate increases more than offsetting the 4.2% volume decline.

“Volumes decreased due to export competition from non-U.S. sources, trade policy, and the challenging weather conditions in 2019,” BNSF said.

Even though coal volume increased 1.1%, revenue declined 3.1% on lower revenue per unit.
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