Rail carrier income reports; 4th quarter 2006
Burlington Northern Santa Fe
Burlington Northern Santa Fe reported record quarterly earnings of $1.42 per diluted share, a 26-percent increase over fourth-quarter 2005 earnings of $1.13 per diluted share. Fourth-quarter 2006 freight revenues increased $323 million, or 9 percent, to $3.77 billion compared with $3.45 billion in the prior year.
Revenue for the fourth quarter of 2006 included fuel surcharges of approximately $450 million compared with approximately $400 million for the fourth quarter of 2005. The increase in fuel surcharges was driven primarily by increased participation in BNSF's fuel surcharge program. For 2006, BNSF achieved operating revenues of nearly $15 billion, a 15-percent increase over 2005, which includes double-digit increases in each of the Company's four business groups. This increase in revenues and the improvement in the Company's operating ratio enabled BNSF to reach $3.5 billion in operating income, an increase of 20 percent over 2005. As a result, BNSF achieved $5.10 earnings per diluted share for 2006 compared with $4.01 for 2005.
BNSF's operating ratio for the fourth quarter was 75.0 percent.
Canadian National Railway
CN reported net income for the fourth quarter of 2006 was C$499 million, or C$0.95 per diluted share, including a deferred income tax recovery of C$27 million (C$0.05 per diluted share) attributable to the resolution of matters relating to prior years' income taxes. Excluding the deferred income tax recovery, adjusted quarterly net income was C$472 million, or C$0.90 per diluted share. Net income for the year increased 34 percent to C$2,087 million, with diluted earnings per share rising 41 percent to C$3.91.
Included in the 2006 results was a deferred income tax recovery of C$277 million (C$0.51 per diluted share), resulting from the enactment of lower federal and provincial corporate tax rates in Canada, and the resolution of matters pertaining to prior years' income taxes.
CN's operating ratio for the quarter was 61.1 percent, an improvement of seven-tenths of a point. For thse full year 2006, CN's operating ratio improved by 3.1 points to an industry-leading 60.7 percent.
Canadian Pacific Railway
Canadian Pacific announced its fourth-quarter and full year 2006 results. For the full year, net income for 2006 was $796 million, which included a tax benefit of $176 million as a result of a decrease in Canadian federal and provincial income tax rates. This was an increase in net income of 47 percent over 2005. Diluted earnings per share were $5.02 for the full year 2006, an increase of 48 percent over 2005. Net income for the fourth-quarter was $146 million, an increase of 6 percent.
The railway's highlights included the following:
CSX Corporation reported fourth quarter 2006 earnings of $347 million, or 75 cents per share. Earnings in the quarter included an 18 cent per-share benefit from: Hurricane Katrina insurance recoveries, a gain on Conrail property included in other income, and the resolution of certain tax matters. Excluding these items, earnings were 57 cents per share, up 10 percent from the same quarter of 2005. For the full-year, CSX reported earnings per share from continuing operations of $2.82, including the insurance recoveries, the gain on Conrail property and income tax benefits. On a comparable basis, full-year earnings per share were $2.22, a 31% improvement over prior year's comparable results.
The Company's Surface Transportation businesses posted record fourth quarter revenues of $2.4 billion, an 8 percent increase from the fourth quarter of 2005. The increase was driven by strength in pricing, a growing agricultural market, export demand for coal and continued growth in imports that offset softness in the housing and automotive sectors. Yields increased over 8 percent, with improvements across nearly all markets.
Kansas City Southern
Led by price increases and volume growth of 3.5%, Kansas City Southern recorded fourth quarter 2006 revenues of $442.4 million, a 14.0 % increase over fourth quarter 2005.
For the year, KCS recorded total revenues of $1.7 billion, 9% greater than the previous year. Fourth quarter operating expenses were $354.2 million, an increase of only 4.1% over last year.
Increased depreciation, compensation and benefits, and equipment expenses were partially offset by quarter-over-quarter decreases in purchased services and other. Fuel costs were $1.5 million higher in fourth quarter of 2006 over last year. For the full-year 2006, operating expenses of $1.4 billion decreased by 0.8% excluding non-recurring adjustments to expenses in 2005. Operating income for the fourth quarter of 2006 was a record $88.2 million compared with $47.7 million last year, an 84.9% improvement.
The fourth quarter 2006 operating ratio was 80.1 %, a 7.6 point reduction from fourth quarter 2005. For full-year 2006, the operating ratio was 81.7 % compared to 88.3 % the preceding year excluding non-recurring adjustments to expenses in 2005.
Norfolk Southern reported record fourth-quarter 2006 net income of $385 million, an increase of 6 percent compared with $362 million for fourth-quarter 2005. Earnings per diluted share were a record $0.95, up 9 percent compared with the $0.87 per diluted share earned in the fourth quarter of 2005.
Net income for 2006 was a record $1.5 billion, or $3.57 per diluted share, an increase of 16 percent compared with net income of $1.3 billion, or $3.11 per diluted share, for 2005.
Railway operating revenues set a fourth-quarter record, reaching $2.3 billion, a 3 percent increase over the same period a year earlier. For 2006, railway operating revenues of $9.4 billion were the highest of any year in Norfolk Southern's history, improving 10 percent compared with 2005 results.
The fourth-quarter operating ratio improved to 73.5 percent, compared with 73.7 percent for the same period of 2005. For the year, the operating ratio improved 2.4 percentage points to 72.8 percent.
Union Pacific Corporation reported 2006 fourth quarter net income of $485 million, or $1.78 per diluted share, compared to $296 million, or $1.10 per diluted share in the fourth quarter of 2005.
In the fourth quarter of 2006, UP reported operating income of $810 million compared to $533 million in fourth quarter 2005, a 52 percent improvement.
The railroad's operating ratio improved to 79.6 percent versus 85.3 percent in 2005.
The Company's commodity revenue grew nine percent to a fourth quarter best $3.8 billion, with five of the six business groups posting increases for the quarter. The main component of the growth was an eight percent increase in average revenue per car (ARC). Growth in ARC resulted from yield improvements and the Company's fuel surcharge programs.
The Company's fuel consumption rate, as measured by gallons per thousand gross ton-miles, was a fourth quarter best rate of 1.27 versus 1.30 in the fourth quarter 2005.
The Railroad's average quarterly fuel price including transportation and taxes was $1.94 compared to $2.08 per gallon in 2005.
Quarterly average train speed, as reported to the Association of American Railroads, was 22 mph, up 1.5 mph from the fourth quarter of 2005. Quarterly terminal dwell time improved 13 percent to 25.9 hours versus 29.8 hours reported in the fourth quarter of 2005.
For the full year 2006, UP' operating ratio improved 5.3 points to 81.5 percent versus 86.8 percent in 2005.
Full year 2006 net income was $1.6 billion or $5.91 per diluted share, versus $1.0 billion, or $3.85 per diluted share reported in 2005. The 2005 full year results included a non-cash income tax expense reduction of $118 million after-tax, or $.44 per diluted share. The comparison of 2006 and 2005 earnings, excluding the tax item, would be $5.91 per diluted share versus $3.41 per diluted share, a 73 percent increase.
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