The railroad’s pre-tax earnings rose 11.2 percent last year, to $6.3 billion, as revenue climbed 7.9 percent, to $21.4 billion, BNSF’s parent company, Berkshire Hathaway, reported on Saturday.
BNSF’s operating ratio was 65.7 percent, an improvement of 0.6 points compared to 2016.
Traffic was up 5.3 percent, to 10.3 million carloads and intermodal units, while average revenue per unit increased 2.4 percent for the year.
“Our overall volume growth moderated in the second half of the year compared to the growth experienced in the first half of the year. While we believe the general economy will continue to be strong in 2018, we expect a slower pace of volume growth,” the railroad said in the Berkshire Hathaway annual report.
Revenues from consumer products rose 8.8 percent compared to 2016, reflecting a 6.3 percent increase in intermodal and automotive traffic.
“The volume increases were primarily attributable to improving economic conditions, normalizing of retail inventories, new services and higher market share, which benefited domestic intermodal, international intermodal and automotive volumes,” BNSF says.
Revenues from industrial products were up 7.7 percent from 2016, as volume rose 5 percent, led by frac sand and other shipments that support oil and natural gas drilling. Strengthening in the industrial sector drove greater demand for steel and taconite, BNSF says.
Revenues from agricultural products increased 1.8 percent, primarily due to higher average revenue per car. Volumes were relatively flat.
Coal revenue increased 13.7 percent as volume rose 6.3 percent and rates rose. The volume increases in 2017 were due to continued effects of higher natural gas prices, BNSF says, which led to increased utility coal usage. This was partially offset, however, by the effects of unit retirements at coal generating facilities and increased renewable generation.
For the fourth quarter, BNSF’s operating income was up 11 percent, to $2 billion, on revenue of $5.6 billion, a nearly 6 percent increase, the railroad reported in a regulatory filing today.
A real, actual, great railroad. In contrast to that squalid disgrace headquartered in Jacksonville Florida.
Some good news. I am glad they are doing well.
CHARLES BULLOCK – I don’t blame Wall Street for CSX’s dysfunction. I blame the CSX management and the BOD fools that picked EHH and gave him $84 million to ruin the railroad.
It’s amazing what can be achieved, when you’re not trying to appease Wall Street, which only goes by the mantra what have you done lately.
Volume increases can (and did) drive ARPU up. This is another good way to improve the OR.
Even though B-H likely doesn’t prioritize OR as much as it’s prioritized for the other Class 1s I think it’s a better way forward than focusing only on cutting costs.