Carrier income reports: Fourth quarter 2005

Burlington Northern Santa Fe

Burlington Northern Santa Fe Corporation recorded quarterly earnings of $1.13 per diluted share, a 24-percent increase over fourth-quarter 2004 earnings of $0.91 per diluted share.

Fourth-quarter 2005 freight revenues increased $527 million, or 18 percent, to a quarterly record of $3.45 billion compared with 2004 fourth-quarter freight revenues of $2.92 billion. This resulted from a 3 percent increase in units, a 6 percent increase in price and a 9 percent increase in fuel surcharges. Revenue for the fourth quarter of 2005 included fuel surcharges of $424 million compared with $150 million in the fourth quarter of 2004.

During the fourth quarter, BNSF experienced double-digit revenue increases in three of the Company's four business groups, as compared with the fourth quarter of 2004. For 2005, BNSF achieved operating revenues of nearly $13 billion, a 19-percent increase over 2004. This includes double-digit increases in three of the four business groups.

BNSF's quarterly operating ratio improved to 76.8 percent.


Canadian National Railway

CN reported its financial and operating results for the fourth quarter and year ended Dec. 31, 2005. Fourth-quarter 2005 financial highlights include: Diluted earnings per share of C$1.56, an increase of 21 percent over diluted fourth-quarter 2004 EPS; Net income of C$430 million, up 14 percent; Operating income of C$720 million, an increase of 19 percent; Record fourth-quarter operating ratio of 61.8 percent, a 3.2-percentage point improvement over the year-earlier quarter; and Record full-year 2005 free cash flow of C$1.3 billion.

Revenues for the fourth quarter of 2005 increased nine percent over fourth-quarter 2004 to C$1,886 million, with intermodal, metals and minerals, and automotive commodity groups registering double-digit revenue gains. Forest products, petroleum and chemicals, coal, and grain and fertilizers revenues also improved.

CN's 2005 revenue performance was driven largely by, among other things, increased freight rates, an important part of which was due to a higher fuel surcharge resulting from increases in crude oil prices.


Canadian Pacific Railway

Canadian Pacific Railway reported that strong revenue growth propelled net income to a record $543 million, a 32-percent increase over 2004. Net income in 2005 included a $72-million after-tax decline in foreign exchange gains on long- term debt and a favorable $35-million after-tax reduction in special charges for labour restructuring and environmental remediation, compared with 2004.

Excluding foreign exchange gains on long-term debt and other specified items, CP's operating income broke through the billion-dollar mark for the first time, increasing 27 percent to $1,001 million. For the fully year 2005 compared to full year 2004, the railway's diluted earnings per share increased 45 percent to $3.30 and revenue grew 13 percent to $4,392 million, with increases in six of seven business lines. The railway's full-year 2005 operating ratio improved 2.6 percentage points to 77.2 percent.

For the fourth quarter, CP's operating ratio improved by 3.1 percentage points to 74.1 percent over the same quarter of 2004.


CSX

CSX reported fourth quarter 2005 net earnings of $237 million, or $1.03 per share, a 45 percent increase in earnings per share from continuing operations versus the same quarter in 2004.

The company's net earnings were driven by stronger Surface Transportation operating income, higher real estate sales and lower interest expense. Surface Transportation, which includes rail and intermodal operations, achieved:

"We enter 2006 with a strong foundation and an economic environment that favors rail transportation," said Michael J. Ward, CSX chairman and CEO.


Kansas City Southern

Kansas City Southern said its quarterly net loss nearly tripled, hurt by the effects of hurricanes Katrina and Rita.

The net loss for the fourth quarter totaled $4.1 million, or 5 cents, compared with a net loss of $1.4 million, or 2 cents a share, a year earlier.

The company said the two hurricanes reduced operating income by $12.8 million. Operating income for the quarter was $46.6 million, compared with $27.4 million a year earlier. Katrina resulted in the rerouting of some connecting rail traffic away from the Gulf region, leading to congestion along parts of the railroad's system, as well as disrupting locomotive and freight car positioning and availability.

Twenty chemical plants and refineries were closed for varying periods in the quarter and virtually all of the Gulf Coast plants served by Kansas City Southern operated at less than full capacity throughout the quarter.

Consolidated revenue rose to $388.2 million for the quarter, compared with $174.6 million in the same period in 2004.


Norfolk Southern

Norfolk Southern Corporation reported record fourth quarter net income of $362 million, or $0.87 per diluted share, an increase of 37 percent compared with $264 million, or $0.65 per diluted share, for fourth-quarter 2004.

For the fourth quarter 2005: railway operating revenues increased 16 percent to a record $2.3 billion; Income from railway operations rose 29 percent to a record $594 million; Net income set a fourth-quarter record of $362 million, or $0.87 per diluted share; and the railway operating ratio improved 2.6 percentage points to 73.7 percent.

Net income for 2005 was a record $1.3 billion, an increase of 39 percent compared with net income of $923 million for 2004. Net income for 2004 included a $53 million gain on the Conrail corporate reorganization. Excluding both of these items, 2005 full-year net income would have been $1.2 billion, or $2.88 per diluted share, 36 percent higher than 2004 net income of $870 million, or $2.18 per diluted share.


Union Pacific

Union Pacific Corp., the nation's largest railroad operator, said its profit nearly quadrupled in the fourth quarter from results weighed down by a hefty charge a year ago. The increase was a more modest 27 percent excluding the charge.

Union Pacific earned $296 million, or $1.10 per share, for the quarter ended Dec. 31, down from $79 million, or 30 cents, in the year-ago period.

In the fourth quarter of 2004, Union Pacific logged a charge of $154 million, or 58 cents per share, related to unasserted asbestos claims. When the asbestos charge is excluded, net income grew 27 percent.

Revenue totaled $3.62 billion, up from $3.22 billion a year earlier and topping the consensus target of $3.52 billion.

The company said it generated a company record $1,428 in revenue per railcar during the fourth quarter. It saw a 1 percent increase in revenue carloads to 2.4 million, but revenue ton-miles declined 1 percent to 136.3 million. Average fuel price surged 42 percent to $2.08 per gallon.

The record revenue per car is a result of the railroad's fuel cost recovery program, which allowed UP to charge higher rates on about 90 percent of its business when fuel prices rose. About 13 percent of UP's business will be up for repricing in 2006, so railroad officials expect to be able to add fuel price protections to more contracts and increase rates to match the current market.

Several catastrophes hit UP last year. West Coast storms hampered operations in January and cost UP about $55 million in operating income. Then in May two derailments on the line that serves Wyoming's coal-rich Powder River Basin slowed coal deliveries. Hurricanes Katrina and Rita cost Union Pacific more than $30 million in August and September. And then storms in Kansas forced the railroad to temporarily close four key lines.

Operating ratio for the fourth quarter of 2005 was 85.3 percent, an improvement over the 93.7 percent posted in the fourth quarter last year. For the full year, UP's operating ratio was 86.8 percent, compared to 89.4 percent for the full year 2004.

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