BNSF Profits Close to $1 Billion in 2nd Quarter

(BRK.A), (BRK.B)

Berkshire Hathaway’s second quarter profits were bolstered by $958 million, as BNSF’s profits rose a dramatic 24 percent.

Higher carload numbers are continuing to bring good news to BNSF Railway as compared to 2016.

Second quarter and first six months of 2017 operating income were $1.8 billion and $3.4 billion, respectively, an increase of $300 million (20 percent) and $389 million (13 percent), respectively, compared to the same periods in 2016.

Total revenues for the second quarter and first six months of 2017 were up 15 percent and 12 percent, respectively, compared with the same periods in 2016. This is a result of increases in unit volume for the second quarter and first six months of 2017 of 9 percent and 8 percent, respectively, and higher average revenue per car/unit.

The increase in average revenue per car/unit in 2017 was primarily due to higher fuel surcharges and business mix changes as well as increased rates per car/unit.

Business unit second quarter and first half of 2017 volume highlights:

• Coal volumes increased 21 percent and 20 percent for the second quarter and the first six months of 2017, respectively, compared with the same periods in 2016, due to mild winter weather in the first quarter of 2016 and higher natural gas prices in the first half of 2017, which led to increased utility coal usage, partially offset by the effects of unit retirements of coal generating facilities.

• Consumer Products volumes were up 6 percent for the second quarter and the first six months of 2017, compared with the same periods in 2016, due to higher domestic intermodal, international intermodal and automotive volumes. The increases were primarily due to higher market share, improving economic conditions and normalizing of retail inventories.

• Industrial Products volumes increased 4 percent and 2 percent for the second quarter and the first six months of 2017, respectively, compared with the same periods in 2016, primarily due to higher minerals, steel, and other commodities that support domestic drilling activity as well as higher taconite. The volume increase was partly offset by lower petroleum products volume due to pipeline displacement of U.S. crude traffic and lower plastics volume.

• Agricultural Products volumes were up 14 percent and 8 percent for the second quarter and the first six months of 2017, respectively, compared with the same periods in 2016, due to higher grain exports.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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