Carrier income reports, 2003 fourth quarter

Burlington Northern Santa Fe

Burlington Northern Santa Fe (BNSF) reported record fourth-quarter 2003 earnings that were 13 percent, higher than fourth-quarter 2002 earnings.

Freight revenues for the fourth quarter increased $185 million to a record $2.46 billion compared with 2002 fourth-quarter revenues of $2.27 billion. Fourth-quarter freight revenues included fuel surcharges of $31 million compared with $14 million in the prior year.

Consumer Products revenues increased $123 million to a record $969 million reflecting increased volumes in the international, truckload and perishables sectors. Industrial Products revenues rose $51 million to $542 million reflecting increased business in steel, taconite, clay and minerals in the construction products sector along with military, lumber and paper traffic in the building products sector.

For the quarter, BNSF's operating ratio was 80.6 percent compared with 80.8 percent for the same quarter in 2002. For the full year, BNSF's operating ratio was 82.1 percent compared with 81.3 percent in the prior year.

Canadian National Railway

Profits at Canadian National Railway Co. motored higher in the fourth quarter after a difficult year of rising fuel costs and a surging loonie. CN posted fourth-quarter earnings of $224 million (Canadian dollars). That compares with a profit of $22 million in the year-earlier period.

CN's results are considered all the more striking given the challenges it faced. Higher corporate taxes in Ontario, higher fuel costs, a higher Canadian dollar compared with the U.S. dollar, and low grain volumes early in the year all poked holes in the company's earnings. Total revenues for the quarter dropped two per cent to $1.55 billion.

For the three months ended Dec. 31, the company recorded its best operating ratio ever at 66.1 per cent. Operating ratio is a measure of operating costs as a proportion of sales. That means it spent the least of all railways in North America to move goods.

(With reporting from the Montreal Gazette)

Canadian Pacific Railway

Canadian Pacific Railway said fourth-quarter profit rose nearly 40 per cent as freight volumes hit new records and commodity exports in the West saw unprecedented growth helped take the sting out of a rising Canadian dollar.

For the quarter ended December 31, CPR reported net income of $175 million (Canadian), up from $126 millionin the same period a year earlier. For the full year, CP made $399 million compared with $496 million a year ago.

Operating income, excluding a loss on assets transferred to IBM Canada Ltd. under an outsourcing agreement, was $226 million compared with $238 million. In total, operating income was cut by $24 million as a result of a stronger Canadian dollar. Revenue rose to $963.5 million from last year's $950.4 million.

The revenue gains were linked to a recovery in the commodity sector that began late in the third quarter as well as an improved grain crop and strong demand for coal and sulphur and a robust potash market.

It's fourth quarter 2003 operating ratio was 76.6 per cent. For the full year, CPR's operating ratio was 79.8 per cent, compared with 76.6 per cent.

CSX Transportation

CSX reported that its fourth-quarter earnings fell about 10 percent, mainly on a restructuring charge stemming from the planned firing of up to 1,000 managers.

In the three months ended Dec. 26, the railroad and transportation company posted earnings of $123 million, compared to $137 million a year earlier.

Excluding the restructuring charge, earnings were $130 million. Revenues for the quarter were $1.95 billion, down from $2.06 billion a year earlier. The prior year included revenue of $189 million from an affiliated company that CSX no longer owns.

CSX said in November that the layoffs will cost $60 million to $80 million, which would be charged over six months. For the full year, CSX reported earnings of $246 million on revenues of $7.79 billion. That compared to earnings of $424 million on revenues of $8.15 billion in 2002.

CSX's operating ratio, or ratio of costs-to-revenue, was 87.4 percent. That's an improvement from 88 percent the previous quarter.

Kansas City Southern

Kansas City Southern reported net income of $11.2 million for the year ended December 31, 2003, compared to $57.2 million for the year ended December 31, 2002.

Excluding an adjustment in claims reserves of $21.1 million, KCS improved its operating income from $48.0 million in 2002 to $50.2 million in 2003. Based on preliminary results, earnings at its Mexican railroad (Grupo TFM) were $11.3 million in 2003 compared to $45.8 million in 2002. This decline resulted primarily from a $19 million reduction in the deferred tax benefit during 2003 compared to 2002 and the devaluation of the peso, which resulted in an approximate $34 million decline in Grupo TFM revenues.

For the fourth quarter of 2003, KCS reported a net loss of $6.2 million compared to net income of $20.4 million for the same 2002 period. The decrease in net income was primarily attributable to an increase in claims reserves of $13.5 million. Excluding this adjustment, net income for the fourth quarter 2003 would have been $7.3 million and operating income would have been 2.9% higher than the fourth quarter of 2002.

Norfolk Southern

NS reported a fourth-quarter net income of $52 million compared to $129 million in the fourth quarter of 2002. The net income was reduced by two charges - a $66 million charge for a voluntary separation program and a $53 million charge to recognize the impaired value of certain telecommunications assets. Excluding these items, fourth-quarter income would have been $171 million.

Operating revenues were the highest in the railroad's history. Fourth-quarter revenues were $1.68 billion, six percent higher than the same period in 2002. For the year, revenues rose to $6.5 billion, three percent higher than 2002 results. In the fourth quarter, intermodal revenues were a record $335 million. For the year, intermodal revenues also set a record at $1.2 billion.

The operating ratio was 86.6 percent compared with 81.8 percent in the same quarter of 2002. Without the cost of the voluntary separation program, the operating ratio would have been 80.3 percent for the 2003 fourth quarter and 81.9 percent for the full year.

Union Pacific Corp.

Union Pacific's profit jumped 46 percent in the fourth quarter, helped by the sale of its trucking business. UP earned $551 million ($2.12 per diluted share) for the quarter ended December 31, up from $378 million ($1.41 per diluted share) in the same quarter of 2002.

The 2003 quarterly results include $0.84 per diluted share, reflecting the recorded gain from the company's sale of its Overnite subsidiary, as well as earnings from Overnite's October operations. From continuing operations, the corporation earned $1.28 per diluted share in the fourth quarter of 2003 compared with $1.38 per diluted share in the fourth quarter of 2002.

For the year, net income increased to $1.6 billion from $1.3 billion in 2002. Revenue rose to $11.6 billion from $11.2 billion in 2002.

Fourth quarter commodity revenue showed an increase versus 2002. For the fourth quarter of 2003, intermodal revenues were up 13 percent, industrial products were up 9 percent, chemicals and energy were up 3 percent, agricultural was up 2 percent, and automotive was up 1 percent.

Of particular note is the fact that employee productivity at Union Pacific increased 5 percent for the full year, reaching an all-time record high of 22 million gross ton-miles moved per employee.

The railroad also boasted of a 4 percent increase in total operating revenue for the full year, which reached a record of $11.6 billion.

However, railroad Chairman Dick Davidson told the Fort Worth Star Telegram that its fourth-quarter results were hampered by a lack of enough workers. He said delays and other service problems cost the railroad up to $30 million from October through December. He told the paper, "the problem was pure and simple - we didn't have enough people." He later told the Fort Worth newspaper that UP planned to hire as many as 3,200 train crew employees in 2004.

Union Pacific's operating ratio for the fourth quarter was 80.1 percent, which was the same as the 2002 quarter. For the full year of 2003, the railroad's operating ratio was 81.5 percent, compared to 79.8 percent in 2002.


© 2004 Brotherhood of Locomotive Engineers and Trainmen