Burlington Northern Santa Fe Corp.'s (BNI) first-quarter net
income fell 36% amid falling freight revenue and coal rate
charges.
The freight-transport sector has been under pressure, and the
latest results showed there is no respite from a withering
slowdown, at least in the near term. Two of Burlington Northern's
chief rivals, CSX Corp. (CSX) and Norfolk Southern Corp. (NSC),
also posted declining profits in the first quarter amid falling
volumes and a drop in coal revenue.
Still, the freight sector has been hopeful that government
stimulus spending will help boost rail volumes in the second half
of the year.
The nation's largest railroad by revenue reported net income of
$293 million, or 86 cents a share, down from $455 million, or $1.30
a share, a year earlier.
The latest results included a $96 million, or 19-cent-a-share
charge, related to an unfavorable coal rate case decision and an
eight-cent-a-share loss on unwinding interest rate hedges on debt
the company no longer expects to be issued.
In January, the company projected per-share earnings of $1, 25
cents under analysts' estimates at the time. Analysts polled by
Thomson Reuters were most recently looking for earnings of 96
cents.
Revenue fell 20% to $3.42 billion, compared with $3.68 billion
Wall Street expected.
Total freight revenue fell 17%, as volume, measured by rail car
units, decreased 14%.
Consumer and industrial products revenue decreased 24% and 23%,
respectively. Consumer products revenue dropped on lower
international intermodal, U.S. intermodal and automotive volumes,
while the drop in industrial products revenue was due to a decline
in unit volumes that was driven by a drop in demand for
construction and building products, which was partially offset by
improved yields. Automotive revenue, counted in consumer goods,
slumped 43%.
Coal revenue grew 0.5% due to improved yields on slightly lower
unit volumes. The slight increase was in contrast to two of
Burlington Northern's rivals, which have already reported weakness
in shipping the once-reliable product.
Fuel costs for the railroad dropped 41%.
Shares rose 2.4% to $69.50 in after-hours trading.
-By John Kell, Dow Jones Newswires; 201-938-5285; john.kell@dowjones.com