Burlington Northern Santa Fe Corp.'s (BNI) first-quarter net income fell 36 percent amid falling freight revenue and coal rate charges, the Dow Jones Newswires reported.
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 percent to $3.42 billion, compared with $3.68 billion Wall Street expected.
Total freight revenue fell 17 percent, as volume, measured by rail car units, decreased 14 percent.
Consumer and industrial products revenue decreased 24 percent and 23 percent, 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 percent.
Coal revenue grew 0.5 percent 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 percent.
Shares rose 2.4 percent to $69.50 in after-hours trading.
(The preceding article by John Kell of the Dow Jones Newswires was published April 23, 2009, by The Wall Street Journal.)
