Carrier income reports: Fourth quarter 2007
Burlington Northern Santa Fe Corporation reported quarterly earnings of $1.46 per diluted share, compared with fourth-quarter 2006 earnings of $1.42 per share. Highlights included:
· Quarterly earnings were $1.46 per diluted share, compared with fourth-quarter 2006 earnings of $1.42 per diluted share.
· Freight revenues increased $352 million, or 9 percent, to $4.12 billion compared with $3.77 billion in the fourth quarter of 2006, principally due to strong yields and an increase in fuel surcharges of approximately $120 million.
· Operating income was $950 million, compared to $943 million in the fourth quarter of 2006. Operating income reflects a $257 million increase in fuel expense, principally resulting from higher fuel prices.
· Full-year 2007 earnings per diluted share were $5.10. This compared to earnings per diluted share of $5.11 for 2006.
· For 2007, BNSF exceeded $1 billion in free cash flow before dividends and achieved $738 million in free cash flow after dividends. For the full year of 2007, operating revenues reached a record $15.8 billion, a 5 % increase over 2006.
Canadian National Railway
CN posted a 67% jump in fourth-quarter net income, aided by gains from a tax adjustment and the sales of its Montreal station complex and stake in the English Welsh & Scottish Railway. Net income for the fourth quarter of 2007 was C$833 million, including a deferred income tax recovery of C$284 million resulting from the enactment of corporate income tax rate changes in Canada, and the after-tax gains on the sale of the CSC of C$64 million and the Company's investment in EWS of C$41 million. Excluding the three items, CN reported adjusted diluted EPS of C$0.90.
The operating ratio, defined as operating expenses as a percentage of revenues, was 62.1 percent during the quarter, compared with 62.2 percent for the fourth quarter of 2006, a 0.1-point decrease.
In 2008, CN also plans to invest approximately C$1.5 billion in capital programs, of which more than C$1 billion will be targeted on track infrastructure to maintain a safe railway and improve the productivity and fluidity of the network.
Canadian Pacific Railway
Fourth quarter net income at Canadian Pacific Railway increased to $342 million in 2007 compared with $146 million in 2006 primarily due to lower future Canadian income tax rates. For the full year 2007, net income improved 19 per cent to $946 million compared with $796 million in 2006. This improvement was driven by an increase in operating income and a foreign exchange gain on long-term debt. In 2007, CP recorded a full year future tax benefit of $163 million compared with a tax benefit in 2006 of $176 million, both due to lower future Canadian income tax rates. Diluted earnings per share was $2.21 in fourth-quarter 2007 compared with $0.92 in fourth-quarter 2006 and $6.08 for the full year 2007 and $5.02 in 2006.
For the fourth quarter 2007, the railway's operating ratio was 74.3 percompared to the same quarter of 200 cent compared with 73.1 percent compared to the same quarter of 2006.
Freight revenue, excluding the impact of foreign exchange, grew in the fourth quarter by five per cent.
CSX Corporation reported fourth quarter 2007 net earnings of $365 million, or 86 cents per share, including a penny per share from insurance gains. In the fourth quarter of last year, the company reported earnings of $347 million, or 75 cents per share, including 18 cents per share from insurance gains, a gain on Conrail property and the resolution of certain tax matters. On a reported basis, earnings per share increased 15% percent on a year-over- year basis.
CSX's surface transportation businesses produced record fourth quarter operating income of $609 million versus $505 million in the same quarter last year. These results included insurance gains of $8 million and $27 million, respectively. On a comparable basis, excluding the insurance gains, operating income rose 26 percent on a year-over-year basis. Improvements in CSX's safety record resulted in a favorable personal injury reserve adjustment for the quarter.
Earnings growth in 2007 was supported by surface transportation revenues that exceeded $10 billion for the first time in CSX's history, and record surface transportation operating income of more than $2.2 billion. The company's operating ratio for the full year improved to its best level in a decade.
Kansas City Southern
Kansas City Southern reported record fourth quarter 2007 revenues of $460.3 million, a 4.0% increase over the corresponding 2006 period. Revenue growth was primarily the result of a continued strong pricing environment as well as volume growth in some key commodity segments. Fourth quarter 2007 highlights:
For the quarter, new business was a significant contributor to a 12.0% revenue increase in chemical & petroleum. Led by increased volumes in Mexico, intermodal revenues grew by 11.6%.
Norfolk Southern reported record fourth-quarter 2007 net income of $399 million, an increase of 4 percent, compared with $385 million for fourth-quarter 2006. Diluted earnings per share were $1.02 compared with the $0.95 per diluted share earned in the fourth quarter of 2006. Net income for 2007 was $1.5 billion, down 1 percent, compared with record net income for 2006. Diluted earnings per share increased 3 percent, or 11 cents, to $3.68.
NS set the following fourth-quarter records: Operating revenues reached $2.5 billion; Income from rail operations rose 12 percent to $686 million; Net income increased 4 percent to $399 million; and Diluted earnings per share climbed 7 percent to $1.02. NS set the following records for the year: Operating revenues increased $25 million to $9.4 billion; Income from rail operations rose $28 million to $2.6 billion; and Diluted earnings per share increased 3 percent to $3.68.
The fourth-quarter operating ratio improved by 1.5 percentage points to 72.0 percent, compared with the same quarter of 2006. For the year, the operating ratio was 72.6, down slightly from the year before.
Union Pacific Corporation reported 2007 fourth quarter net income of $491 million, or $1.86 per diluted share, compared to $485 million, or $1.78 per diluted share in the fourth quarter of 2006.
In the fourth quarter of 2007, Union Pacific reported operating income of $864 million compared to $810 million in fourth quarter 2006, a 7 percent improvement.
UP's operating ratio improved to 79.4 percent versus 79.6 percent in 2006.
UP's commodity revenue grew 6 percent in 2007 to a fourth quarter best of $4.0 billion. All six business groups posted record fourth quarter revenue, and Agricultural revenue set an all-time mark. The main component of the growth was a 6 percent increase in average revenue per car (ARC), which reached an all-time quarterly record of $1,638 per car in the fourth quarter 2007, driven primarily by yield gains.
Business volumes in fourth quarter 2007, as measured by total revenue carloads, were flat at 2.4 million. UP's 2007 average quarterly fuel price, including transportation and taxes, was up 34 percent to $2.59 per gallon compared to $1.94 in 2006.
UP's fuel consumption rate, as measured by gallons per thousand gross ton-miles, was a fourth quarter-best rate of 1.25 versus 1.27 in the fourth quarter 2006. UP repurchased nearly 2.4 million common shares at an average share price of $127.35 in the fourth quarter of 2007.
Fourth quarter 2007 commodity revenue summary versus 2006: Chemicals up 12 percent; Energy up 8 percent; Agricultural up 7 percent; Automotive and Intermodal each up 4 percent; and Industrial Products up 1 percent
Full year 2007 net income was $1.86 billion, or $6.91 per diluted share, versus $1.6 billion, or $5.91 per diluted share reported in 2006. Full year operating ratio improved 2.2 points to 79.3 percent in 2007 versus 81.5 percent in 2006.
Business volumes in 2007, as measured by total revenue carloads, decreased 1 percent to 9.7 million. Operating income was a record $3.4 billion in 2007, a 17 percent increase from $2.9 billion in 2006. UP's fuel consumption rate was a full-year best at 1.26 versus 1.28 in 2006.
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