Burlington Northern income rises, but revenue falls
(The Associated Press circulated the following story by Samantha Bomkamp on July 23, 2009.)
NEW YORK Burlington Northern Santa Fe Corp., the second largest rail operator in the U.S., reported higher profit on Thursday, and said it sees the decline in shipping demand leveling off but can't say when it will start rising again.
"We normally see a lot of improvement in the third quarter we're just not seeing that. But we are seeing stability in the volumes," CEO Matt Rose said in a conference call with analysts.
The railroad reported a 15 percent rise in second-quarter earnings compared to a year ago, as big savings from cheaper fuel and other cost cuts offset plunging demand.
Signs of stabilization, but not improvement, were also seen earlier in the day by Burlington's closest competitor, Union Pacific Corp. CSX, which reported earnings last week, had a similar view.
Burlington's Rose said the company isn't getting clear signs about when demand will pick up.
"We still cannot get customers to give us any headlights," he said.
Burlington Northern said it's not planning to see a seasonal improvement between the third and fourth quarter as it does in a typical year.
Business on the tracks is considered a key gauge of broader economic health because railroads ship everything from cars to coal to lumber.
The Fort Worth, Texas-based railroad earned $404 million, or $1.18 per share in the second quarter, compared with $350 million, or $1 per share a year earlier. The year-ago quarter included a charge of 31 cents per share related to environmental liability case in Montana.
Revenue fell 26 percent to $3.32 billion.
The results came in well above what Wall Street was expecting. Thomson Reuters says analysts expected profit of $1.01 per share on revenue of $3.43 billion.
The company paid less than half for fuel in the April-to-June period than it did a year ago. Total traffic fell 18 percent, led by declines in automotive, industrial and consumer products shipments.
The railroad slashed costs by 33 percent. It furloughed employees, stashed cars and locomotives, and worked to drive its trains faster and more efficiently to save money. The company had 37,715 at the end of the quarter compared with 41,404 a year ago.
Burlington Northern said it will keep trying to cut costs through the end of the third quarter to account for ongoing weak demand. It predicts total expenses will be 25 percent lower in the period than a year ago.
Omaha, Neb.-based Union Pacific, the nation's biggest railroad, reported a 12 percent drop in income earlier Thursday, also topping Wall Street forecasts.
Burlington Northern's shares fell $2.60, or 3.3 percent, to $76.60 in aftermarket trading. They ended the regular session up $2.42, or 3.2 percent, to $79.20.
