BNSF Railway’s revenue, profit rise on traffic gains in 2017

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FORT WORTH, Texas — BNSF Railway reported higher revenue and earnings for 2017 amid volume growth and pricing increases.

The railroad’s pre-tax earnings rose 11.2 percent last year, to $6.3 billion, as revenue climbed 7.9 percent, to $21.4 billion, BNSF’s parent company, Berkshire Hathaway, reported on Saturday.

BNSF’s operating ratio was 65.7 percent, an improvement of 0.6 points compared to 2016.

Traffic was up 5.3 percent, to 10.3 million carloads and intermodal units, while average revenue per unit increased 2.4 percent for the year.

“Our overall volume growth moderated in the second half of the year compared to the growth experienced in the first half of the year. While we believe the general economy will continue to be strong in 2018, we expect a slower pace of volume growth,” the railroad said in the Berkshire Hathaway annual report.

Revenues from consumer products rose 8.8 percent compared to 2016, reflecting a 6.3 percent increase in intermodal and automotive traffic.

“The volume increases were primarily attributable to improving economic conditions, normalizing of retail inventories, new services and higher market share, which benefited domestic intermodal, international intermodal and automotive volumes,” BNSF says.

Revenues from industrial products were up 7.7 percent from 2016, as volume rose 5 percent, led by frac sand and other shipments that support oil and natural gas drilling. Strengthening in the industrial sector drove greater demand for steel and taconite, BNSF says.

Revenues from agricultural products increased 1.8 percent, primarily due to higher average revenue per car. Volumes were relatively flat.

Coal revenue increased 13.7 percent as volume rose 6.3 percent and rates rose. The volume increases in 2017 were due to continued effects of higher natural gas prices, BNSF says, which led to increased utility coal usage. This was partially offset, however, by the effects of unit retirements at coal generating facilities and increased renewable generation.

For the fourth quarter, BNSF’s operating income was up 11 percent, to $2 billion, on revenue of $5.6 billion, a nearly 6 percent increase, the railroad reported in a regulatory filing today.
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