Rail carrier income: First quarter 2007

BNSF Railway

BNSF reported quarterly earnings of $0.96 per diluted share, which included a $0.14 charge for additional environmental expenses and a technology system write-off, compared with first-quarter 2006 earnings of $1.09 per diluted share, which included a $0.04 per share line sale gain. Highlights included: Freight revenues that were a first-quarter record of $3.54 billion and were 5 percent higher compared with first quarter of 2006, on flat volumes; Quarterly earnings that were $0.96 per diluted share, which included a $0.14 charge for additional environmental expenses and a technology system write-off, which compares to first-quarter 2006 earnings of $1.09 per diluted share, which included a $0.04 per share line sale gain; and Operating income was $694 million, which included the environmental and technology charge of $81 million as well as fuel headwinds of approximately $60 million principally resulting from a decline in fuel hedge positions. This compares to first-quarter 2006 operating income of $793 million, which included $22 million from a line sale gain. Operating expenses for the first quarter of 2007 were $2.95 billion compared with first-quarter 2006 operating expenses of $2.67 billion.

Canadian National Railway

Severe weather in the West in January, a two-week labor stoppage in February and avalanches and landslides in March hit Canadian National Railway Co.'s earnings in the first quarter, interrupting the "great run" it has achieved since going public in 1995. CN came in with a net profit of $324 million or 63 cents a share, down 10 percent from $362 million or 66 cents a share in the 2006 period, but chief executive officer Hunter Harrison told analysts CN will quickly regain speed in 2007 and still counts on a "great future." Harrison said the February work stoppage cost the bottom line $35 million.

CN expects to spend a total of around $1.5 billion on share-buybacks this year. This will allow for normal capital spending on the continent-wide network and investment in new products and services.

First-quarter revenue was $1.91 billion, up $9 million from $1.897 billion a year earlier. Operating income dipped 10 percent to $561 million. The operating ratio - a key measure of efficiency - deteriorated slightly.

Canadian Pacific Railway

Canadian Pacific Railway Ltd. posted an 18 percent rise in first-quarter earnings despite harsh winter weather that disrupted operations in Western Canada. CP plans to buy back up to 15.5 million of its outstanding common shares for cancellation, representing about 10 percent of the public float. The company said it had net earnings of C$128.6 million, or 82 Canadian cents per share, in the first three months of 2007. That compares with a profit of C$108.8 million, or 69 Canadian cents per share, in the same quarter a year earlier.

CP officials had warned earlier they expected earnings would be hit by weather conditions that damaged its mainline in British Columbia, and disruptions caused by a strike at larger rival Canadian National Railway. Excluding foreign exchange gains and losses on long-term debt, diluted earnings per share rose 8 percent to 78 Canadian cents from 72 Canadian cents.

CP said its operating ratio - a transportation industry measure of efficiency - improved to 79.5 percent from 79.6 percent a year ago.

CSX Corporation

CSX Corp.'s first quarter earnings were down a penny per share from a year ago, as rising expenses cut into record revenues of $2.4 billion. The bottom line was most affected by a jump of $81 million in materials, supplies and other expenses, a category that includes $28 million in charges related to derailments of the company's trains during the quarter.

CSX saw a slew of accidents during the first quarter, prompting harsh comments from politicians in New York - where several of the accidents happened - as well as federal regulators. The charges left the company with net earnings of $240 million, or 52 cents a share, down 2 percent from the year-ago quarter's $240 million, or 53 cents a share. That figure includes earnings of $18 million, or 2 cents per share, in insurance payouts from claims related to Hurricane Katrina. These results missed analyst expectations of 53 cents per share earnings, although they surpassed the expected $2.38 million in revenue

CSX's operating ratio, a metric used to gauge how efficiently the company is operating, inched upward to 79.9 after a year in which the railroad got it down to 77.8, meeting its long-term goal of getting below 80.

Kansas City Southern

KCS recorded first quarter 2007 revenues of $411.3 million, a 5.9% increase over first quarter 2006. The revenue growth was attributed to a strong pricing environment and carload growth in some of the railroad's business segments. First quarter highlights include:

For the first quarter, KCS revenues were led by coal, which had revenue growth of 13.3% in the quarter, and chemical and petroleum products, which experienced revenue increases of 12.5% quarter over quarter. In addition, in the first quarter, revenues in agriculture and minerals increased 8.6%, paper and forest products grew 0.9%, and intermodal improved 11.6%. Automotive revenue was down 8.5% in the first quarter.

First quarter operating expenses were $338.9 million, an increase of only 3.6% over last year.

Norfolk Southern

For the first quarter of 2007, Norfolk Southern Corporation reported net income of $285 million, or $0.71 per diluted share, compared with $305 million, or $0.72 per diluted share, for the first quarter of 2006. The decline in net income reflected lower income from railway operations as well as lower non-operating income.

First-quarter railway operating revenues were $2.2 billion, down 2 percent compared with the first-quarter of 2006. Continued weakness in the automotive and housing industries contributed to a 4 percent reduction in volumes during the quarter compared with record volumes reported in the year-earlier period.

For the first quarter, general merchandise revenues were $1.2 billion, down 4 percent compared with the same period last year. Coal revenues reached $557 million, about even with first-quarter 2006. Intermodal revenues were $462 million, down 1 percent compared with the same period last year.

For the quarter, the railway operating ratio was 76.5 percent, slightly higher compared with 76.1 percent during first-quarter 2006.

Union Pacific

UP reported 2007 first quarter net income of $386 million or $1.41 per diluted share, compared to $311 million, or $1.15 per diluted share in the same quarter last year.

First Quarter 2007 Highlights

2007 First Quarter Summary




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