BNSF’s Q2 earnings chug ahead nearly 37 percent

The Class I railway benefited from increased volumes, higher average revenue per car/unit, a tight trucking market and a lower effective income tax rate.    Burlington Northern Santa Fe LLC (BNSF), a Class I railroad owned by Berkshire Hathaway, saw year-over-year increases in net earnings of 36.6 percent and revenues of 12 percent for the second quarter of 2018.
   BNSF reported net earnings of $1.3 billion on revenues of $5.9 billion.
   BNSF benefited from increased volumes, higher average revenue per car/unit and a tight trucking market. Also a tailwind was the lower effective income tax rate, which was 20.9 percent for the quarter, down from 37.7 percent for last year’s second quarter.
   Revenues from consumer products totaled $2 billion for the quarter, up 13.6 percent from last year’s second quarter amid a 4.7 percent boost in volumes.
   Meanwhile, revenues from industrial products clocked in at $1.5 billion for the quarter, up 16.3 percent year-over-year as volumes increased 10.4 percent. “Volumes in 2018 were higher primarily due to the energy and industrial sectors, which drove demand for sand, petroleum products, steel and plastics,” Berkshire Hathaway said.
   Revenues from agricultural products totaled $1.2 billion for the quarter, up 10.1 percent from last year’s second quarter. Volumes for the quarter increased 9.1 percent year-over-year thanks to strong export and domestic grain shipments, as well as higher fertilizer and other grain volumes.
   However, revenues from coal during the quarter slipped 0.1 percent year-over-year to $911 million. Coal volumes fell 0.5 percent from last year’s second quarter, mainly due to utility plant retirements, partially offset by market share gains and increased export volumes.
   All four segments during the quarter benefitted from a higher average revenue per car/unit compared to the second quarter of 2017.
   The six other Class I railways have already released their financial results for the second quarter of 2018, with all but Canadian Pacific, which suffered from service disruption due to labor contract negotiations, increasing net profits during the quarter from a year prior. CSX fared the best in terms of profit growth, with net earnings surging 72 percent year-over-year to $877 million; followed by Norfolk Southern, with net income up 42.9 percent to $710 million; Union Pacific, up 29.2 percent to $1.51 billion; Canadian National, the larger of the two Canada-based Class Is, up 27.1 percent to C$1.3 billion (U.S. $995.8 million); and Kansas City Southern, up 10.4 percent to $148.7 million. Canadian Pacific’s net income of C$436 million was down 9.2 percent from the second quarter of 2017.