BNSF Sees 2% Rise in Q1 Operating Income

(BRK.A), (BRK.B)

Despite difficult weather conditions, BNSF Railway saw a 2 percent rise in operating income in the first quarter of 2019.

First quarter 2019 operating income was $1.8 billion, an increase of $32 million (2%), compared to the same period in 2018. Total revenues for the first quarter of 2019 were up 2%, compared with the same period in 2018 primarily due to an 8% increase in average revenue per car/unit, as a result of increased rates per car/unit, a favorable outcome of an arbitration hearing, and higher fuel surcharges.

This increase was partially offset by a 5% decrease in unit volume due to severe winter weather and flooding on parts of the network, as well as the following individual business unit drivers:

• Consumer Products volumes decreased 6% for the first quarter of 2019 compared with the same period in 2018 primarily due to lower intermodal volumes, which were driven by lower international intermodal market share, increased truck competition, and the aforementioned challenging weather conditions.

• Industrial Products volumes increased 1% for the first quarter of 2019 compared with the same period in 2018 primarily due to strength in the energy and industrial sectors, which drove higher demand for petroleum products, liquefied petroleum gas, and aggregates. This increase was partially offset by lower sand and taconite volumes as well as the aforementioned challenging weather conditions.

• Agricultural Products volumes decreased 7% for the first quarter of 2019 compared with the same period in 2018 primarily due to the aforementioned challenging weather conditions, partially offset by higher soybean exports.

• Coal volumes decreased 10% for the first quarter of 2019 compared with the same period in 2018 primarily due to the aforementioned challenging weather conditions, partially offset by higher market share.

© 2019 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.

Leave a Reply