BNSF's Third-Quarter Net Earnings Grow

Despite lower revenues, western U.S. railroad BNSF posted a net profit in the third quarter amid lower operating costs, BNSF said in a financial report Nov. 4.

BNSF had a net profit of $1.47 billion, a 5.2% increase from net earnings of $1.39 billion in the third quarter of 2018. BNSF's operating ratio fell to 62.6%, compared with 64.5% in the third quarter of 2018. A lower operating ratio can imply increased profitability. 

BNSF is privately held and belongs to parent company Berkshire Hathaway, which released its financial results over the weekend.

BNSF's total revenue fell 2% to $6 billion in the third quarter from $6.1 billion for the same period in 2018.

Meanwhile, total operating expenses were $3.8 billion in the third quarter, compared with $4 billion in the third quarter of 2018.

BNSF hauled fewer volumes in the third quarter, with aggregated volumes totaling 2.65 million carloads/units in the third quarter of 2019 compared with 2.72 million carloads/units for the same period in 2018, according to Berkshire Hathaway.

Third-Quarter Revenue Breakdown

Breaking down BNSF's overall revenues by commodity segments, industrial products and agricultural products were higher, while consumer products and coal revenues slipped in the third quarter compared to the same period in 2018.

Consumer products revenue fell 1.4% to $2 billion, and volumes slipped 1% in the third quarter amid lower overall demand, loose truck capacity and lower international intermodal market share.

Industrial products revenue in the third quarter rose 1% to $1.6 billion even though volume was down by 3% on overall softness in the industrial sector, lower sand volumes and weather-related reduced carloadings. But higher demand to ship petroleum products and liquefied natural gas partially offset the declines.

Agricultural products revenue in the third quarter was relatively flat at $1.2 billion, although volume fell by 6% amid factors such as competition from non-U.S. countries and changes in international trade policies.

Third-quarter coal revenue fell 7% to nearly $1 billion amid a 4% decline in volumes. Adverse weather conditions and lower prices for natural gas, a competing generating fuel, put pressure on coal volumes.

Source: BNSF

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