BNSF Trims Capital Expenses, Has Increase in Consumer Products Volume

(BRK.A), (BRK.B)

BNSF Railway has trimmed its capital expenses by $100 million, reducing it slightly from its planned $3.3 billion for 2017.

The railroad cites cost savings, noting that it “completed certain projects at a lower cost, delayed the timing of certain projects, and made modifications to equipment acquisitions.”

2017 revenues continue to show solid growth over 2016 levels.

Third quarter and first nine months of 2017 operating income were $2.0 billion and $5.3 billion, respectively, an increase of $73 million (4 percent) and $462 million (9 percent), respectively, compared to the same periods in 2016.

Total revenues for the third quarter and first nine months of 2017 were up 3 percent and 8 percent, respectively, compared with the same periods in 2016. This is a result of increases in unit volume for the third quarter and first nine months of 2017 of 3 percent and 6 percent, respectively, and higher average revenue per car/unit in the first nine months of 2017.

The increase in average revenue per car/unit in the first nine months of 2017 was primarily due to higher fuel surcharges and increased rates per car/unit.

Among the highlights were increased volumes in Consumer Products.

Consumer Products volumes were up 7 percent and 6 percent for the third quarter and the first nine months of 2017, respectively, compared with the same periods in 2016, due to higher domestic intermodal, international intermodal and automotive volumes.

The increases were primarily due to improving economic conditions, normalizing of retail inventories, new services, and higher market share.

While petroleum shipments continue to slide, with year-to-date numbers down -15.59%, the combined intermodal and carloads numbers are up 5.59% in the aggregate.

© 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.

Leave a Reply