BNSF Railway Reports Higher Second-Quarter Pre-Tax Earnings on Volume Growth and Revenue Gains
Key Takeaways
- •BNSF Railway's second-quarter pre-tax earnings increased 13.9% to $2.06 billion while revenue climbed 14.6% to $6.56 billion.
- •Consumer products volume grew 9.3%, driven by higher West Coast intermodal shipments, market share gains, and constrained trucking capacity.
- •Agricultural and energy products traffic posted the largest volume gain at 11.5%, led by increased grain exports and petroleum fuel shipments.
- •Coal volume fell 7.9% as U.S. utilities continued retiring coal-fired power plants in favor of natural gas and renewable energy sources.
- •Fuel costs surged 68% year over year, contributing to a 15.6% rise in operating expenses and a 0.6-percentage-point increase in the operating ratio to 65.4%.
BNSF Railway posted higher second-quarter pre-tax earnings, driven by a combination of volume growth and increased revenue per load, according to results released Saturday by parent company Berkshire Hathaway (NYSE: BRK-B).
The railroad's pre-tax earnings rose 13.9% to $2.06 billion, while revenue climbed 14.6% to $6.56 billion. Operating expenses increased 15.6% year over year, as fuel costs surged 68%. BNSF's operating ratio—a key industry metric measuring operating expenses as a percentage of revenue, where lower is better—stood at 65.4%, reflecting a 0.6-percentage-point increase.
Quarterly volume rose 6.5%, and average revenue per unit increased 7.6%, primarily due to higher fuel surcharge revenue, which passes through fluctuations in diesel prices to customers.
Consumer products volume, which includes intermodal and automotive traffic, grew 9.3%. Berkshire attributed this growth to "higher intermodal shipments resulting from higher West Coast imports, market share gains, and tightening truck capacity." The reference to tightening truck capacity reflects broader dynamics in the freight sector, where rail intermodal service can capture volumes when trucking capacity becomes constrained.
Agricultural and energy products traffic increased 11.5% for the quarter. "The volume increases were primarily due to higher grain exports, petroleum fuels and oilseeds and meals," Berkshire reported.
Industrial products volume rose 3.1%, which Berkshire linked to higher shipments of steel, aggregates, and cement.
Coal volume declined 7.9%, which Berkshire said was "primarily due to plant retirements and lower demand, attributable to lower natural gas prices." The decline continues a multi-year trend as U.S. electric utilities retire coal-fired power plants in favor of natural gas and renewable energy sources.
BNSF Railway, headquartered in Fort Worth, Texas, is one of the largest freight railroads in North America and one of two major Class I railroads serving the western United States alongside Union Pacific. It operates approximately 32,500 route miles across 28 U.S. states and three Canadian provinces. BNSF is one of Berkshire Hathaway's largest wholly-owned subsidiaries and a significant contributor to the conglomerate's overall earnings. Berkshire Hathaway, led by Chairman and CEO Warren Buffett, acquired BNSF in 2010 in a deal valued at approximately $44 billion.
Source: FreightWaves
