Carrier fourth quarter income reports
Burlington Northern Santa Fe
Burlington Northern Santa Fe reported fourth quarter 2000 earnings which were 6 percent lower than fourth quarter 1999 earnings. Revenues of $2.34 billion for the 2000 fourth quarter were $51 million lower than the prior-year period.
Operating expenses of $1.80 billion were $8 million higher than the 1999 fourth quarter. Fuel expense was $75 million higher than 1999, despite a 3 percent decrease in consumption. The average cost of diesel fuel per gallon, excluding hedge effects, increased 34 cents to $1.06. Overall expenses, excluding fuel, were down by $67 million, or 4 percent primarily a result of lower environmental and incentive compensation expenses.
Operating income was $544 million for the fourth quarter 2000 compared with $603 million a year ago. The operating ratio increased to 76.5 percent for the fourth quarter 2000 compared with 74.5 percent in 1999.
Canadian National Railway
Canadian National Railway's fourth-quarter income rose 11% to 237 million Canadian dollars (US$155 million) from C$213 million (US$140 million) on a larger number of shares, in the comparable 1999 period.
Revenue and carload volume in the final quarter of 2000 were relatively flat at US$920 million and 949,000, respectively, as the North American economy slowed noticeably. The railroad managed to reduce expenses in the period by 3% to US$630 million, offsetting a significant increase in fuel prices.
Operating income in the fourth quarter rose 8% to US$290 million, and the ratio of operating expenses to revenue, a key measurement of railroad operating efficiency, improved by 2.4 points to 68.3%, the lowest of any major railroad in North America.
For the full year, operating income increased 12% to US$1.1 billion, and the operating ratio improved 2.4 points to 69.6%.
CSX Corp. earned $54 million, or 26 cents a share in the quarter. The results were an improvement from the year-earlier quarter, when it earned $44 million, or 20 cents a share, excluding onetime items in that period.
The company did not follow the path of eastern competitor Norfolk Southern Corp. and Union Pacific Corp., which announced staff cuts in response to declining freight levels. Nor did CSX give any specific earnings forecasts for the current quarter or year.
The company's revenue fell 22% in the quarter to $2.0 billion from $2.6 billion. But almost all of that is due to the loss of revenue from Sea-Land, which was included in the year-earlier results. Rail revenue stayed essentially flat at $1.8 billion in both the most recent quarter and year-earlier result.
Fuel costs at CSX Transportation rose 49% to $168 million. But the containment of other operating expenses at the railroad meant that its ratio of operating expenses to revenue actually improved slightly to 88.7% from 89.1%, when $55 million in severance costs are excluded from the year-earlier results. Railroads historically shoot for an operating ratio in the 80% range.
The company's results in the fourth quarter of 1999 were hurt by service problems at the railroad due to the integration of half of Conrail into its system earlier in the year, along with damage to track from Hurricane Floyd in September 1999.
Canadian Pacific Railway
Canadian Pacific Railway's fourth-quarter earnings jumped to US$170 million from US$80 million a year earlier. The railroad earned US$353 million in 2000, compared with US$242 million in 1999.
Overall, the railway's parent company Canadian Pacific Ltd. earned a record 1.8 billion Canadian dollars (US$1.2 billion) for the full-year 2000, more than doubling the US$388 it earned in 1999 .
CPR had its fifth consecutive year of record operating income, aided by cost reductions and increased revenue. Freight revenue was up 4%, with all commodity groups showing gains, while operating expenses increased just 3% despite an increase in volume and sharply higher fuel prices. The ratio of operating expenses to revenue, a key indicator of railroad operating efficiency, improved 1.3 points to 76.9% from 78.2% a year earlier.
Railroad operating income slipped in the fourth quarter to US$155 million, down US$14 million, or 8%, largely as a result of a Canadian government-imposed cap on grain revenue and lower coal rates.
Revenue in the quarter declined by US$11 million, or 2%, and operating expenses declined by US$7 million, or 2%. The operating ratio in the quarter was 74.9% compared with 73.6% in the 1999 fourth quarter.
Kansas City Southern Industries
Kansas City Southern Industries, Inc. reported fourth quarter 2000 income from continuing operations of $3.6 million, a stark improvement when compared to a loss of $7.2 million in the fourth quarter of 1999.
This $10.8 million improvement resulted primarily from an increase in U.S. operating income of $6.8 million, a $6.1 million increase in equity earnings related to Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V., and a decrease in interest expense of $2.5 million, somewhat offset by a decline in income tax benefits. KCSI's consolidated fourth-quarter 2000 revenue decline of $16.9 million (11.1%) was more than offset by a $23.7 million reduction in operating expenses, resulting in improved operating income. Fourth quarter 1999 included $12.8 million of non-recurring unusual costs and expenses.
For the year ended Dec. 31, 2000, income from continuing operations, before extraordinary items, increased $15.2 million (149%) to $25.4 million, or 43 cents per diluted share, from $10.2 million, or 17 cents per diluted share, for the year ended Dec. 31, 1999.
Norfolk Southern Corp.
Norfolk Southern Corp. reported that its fourth-quarter net income plummeted 84%, citing the impact of a slowing economy, higher fuel prices and a one-time charge against the company's bottom line.
The railroad announced sweeping cost-cutting moves on January 23, and said net income fell to $5 million in the fourth quarter, down from $31 million a year earlier. The latest results include a charge of $39 million from voluntary early retirement and separation programs. Excluding the charge, fourth-quarter earnings were $44 million.
The company said fourth-quarter revenue, which rose to $1.52 billion from $1.49 billion, was not as strong as expected. While general-merchandise revenue increased 2% in the quarter from a year earlier, coal revenue fell 6% due to weak volume.
NS also said that it plans to cut 1,000 to 2,000 employees, retire 12,000 freight cars, close as many as 10 facilities, shed 3,000 to 4,000 miles of rail routes and redesign its train network (see related article).
Union Pacific Corp.
Union Pacific Corp. reported fourth-quarter net income of $229 million, down from $242 million a year earlier. The 2000 figure excluded an after-tax charge of $72 million for costs related to work force reduction.
Operating income in the quarter, excluding the Overnite Transportation trucking subsidiary, declined to $438 million, excluding the work-force-reduction charge, from $499 million a year earlier. Overnite's fourth-quarter operating income surged to $16 million, after a $13 million operating loss a year earlier. Revenue at Overnite rose 6% to $274 million from $259 million.
Union Pacific Railroad's commodity revenue increased 2% in the quarter to $2.6 billion. Intermodal revenue rose 9%, while automotive and energy shipments increased by 7%.
For the year, UP reported net income of $842 million, up from $810 million a year earlier. Income from continuing operations jumped 17% in the year to $914 million from $783 million.
"In 2000, our unparalleled rail franchise and our well-balanced commodity mix allowed us to successfully meet the needs of our customers and produce solid financial results," said UP Chairman and CEO Dick Davidson.
Union Pacific Corp.
Wisconsin Central Transportation Corporation (WCTC) reported net income of $10.6 million for the fourth quarter ended Dec. 31, 2000. Excluding special items, income for fourth quarter 2000 would have been $13.4 million compared to $18.3 million for the year-ago quarter.
Excluding special items, the Company's North American operating income for fourth quarter 2000 was $24.3 million compared to $25.5 million in the year- ago quarter.
Versus the year-ago period, fourth-quarter 2000 carloads were down 8 percent, reflecting a softer industrial-economic environment. However, North American operating revenues of $90.9 million were down less than 1 percent from year-ago revenues of $91.4 million, reflecting a more favorable commodity mix and improved pricing.
Fourth quarter 2000 North American operating expenses before special
items were $66.6 million, a one percent increase compared to $65.9 million
for last year. Increases in fuel expense and depreciation more than offset
decreases in many cost categories. Before special items, the operating ratio
(operating expenses as a percentage of operating revenues), a measure of
efficiency in the railroad industry, was 73.3 percent versus 72.1 percent
for the 1999 quarter.
© 2001 Brotherhood of Locomotive Engineers