The three largest Class I railroads reported strong third quarter results. Burlington Northern Santa Fe Corp.'s quarterly freight revenues increased $133m, or 4 percent, to an all-time quarterly record of $3.95bn compared with $3.82bn in the prior year. The 4-percent increase in revenue is primarily attributable to strong yields as well as volume growth in BNSF's Agricultural Products business, the railroad said. Coal revenues rose by $101m, or 14 percent, to $849m. These gains were tempered by weaker demand for building and construction products as a result of the downturn in the housing market and a decline in consumer products.
"BNSF achieved record quarterly revenues, operating income and earnings as a result of our diverse portfolio of businesses, strong cost control and improved yields, said CEO Matthew K. Rose. "We were able to produce record earnings and quarterly operating income that exceeded $1bn for the first time in our company's history despite continued economic softness in our Consumer and Industrial Products business groups.
"Although we have concerns near-term about the economy, housing markets, high fuel prices and general consumer softness, we continue to be optimistic about the long-term future of BNSF," Rose added.
Union Pacific also set records in the quarter with operating revenue growing 5 percent to an all-time high of $4.2bn. Net income for the quarter was $532m, up from $420m for the same period in 2006 and operating income was $1bn, up from $752m. UP also improved its operating ratio 5.1 points.
"Near term we remain cautious on the economy and see challenges from rapidly increasing diesel fuel prices," said CEO Jim Young. "However, we are confident regarding Union Pacific's opportunities to further improve returns through profitable revenue growth and greater productivity."
CSX reported earnings for the quarter of $407m, up from $328m in the third quarter of 2006, despite a 4 percent decline in volume. Third quarter revenues were $2.5bn, a 3 percent year-over-year increase. "Our core earning power continues to improve in a more challenging transportation environment," said CEO Michael Ward. Ward also said the company is targeting nearly $5bn of investment in its transportation network over the next five years.
Burlington Northern Santa Fe Corp. www.bnsf.com
Union Pacific www.up.com
CSX www.csx.com