Rail carrier income: 2nd quarter 2006

BNSF Railway

Burlington Northern Santa Fe Corp., reported second-quarter profit above expectations as its trains remained busy hauling coal and consumer goods across the nation. BNSF said it earned $470 million or $1.27 per share in the April-June quarter, compared to $366 million or 96 cents per share a year earlier. The results for the June quarter included a 4 cent per share benefit from lower tax rates.

Revenue was $3.7 billion, compared to $3.14 billion a year ago, and beat the $3.65 billion that analysts were expecting in the June quarter.

Chairman and CEO Matthew K. Rose reported unprecedented demand across its services, as second-quarter freight revenue rose 18 percent to a record $3.59 billion. Revenue from coal shipments grew 21 percent, largely due to record loads from the Powder River Basin in Wyoming. Consumer product revenue rose 19 percent on both more volume and higher prices. Industrial and agricultural revenues also gained by double-digit percentages. The company raised about $425 million from fuel surcharges, up from $220 million a year ago.

Canadian National Railway

CN reported its financial and operating results for the three-month and six-month periods ended June 30, 2006. Financial highlights include:

E. Hunter Harrison, president and chief executive officer of CN, said: "CN's excellent financial performance during the quarter demonstrates the power and value of our precision railroading model."

Canadian Pacific Railway

Canadian Pacific Railway announced that its second quarter net income was $378 million, an increase of $254 million over the same period in 2005. This increase included a $176-million reduction in future income tax expense and a favourable swing in foreign exchange on long-term debt of $58 million.

The second quarter of 2006 showed various improvements over 2005:

For the first half of 2005, net income was $489 million, an increase of $285 million over the first half of 2005.

CSX Corporation

CSX Corporation reported second quarter 2006 net earnings of $390 million, or $1.66 per share. Earnings for the second quarter included insurance recoveries related to Hurricane Katrina and benefits associated with the resolution of tax matters with a combined impact of $0.50 per share. Last year's second quarter earnings were $165 million, or $0.73 per share, which included costs related to a debt repurchase of $0.54 per share, partially offset by a state income tax benefit of $0.31 per share. On a comparable basis, the company's earnings per share for the second quarter of 2006 were $1.16, a 21 percent increase, compared to $0.96 for the same period last year.

The company posted record Surface Transportation revenues of $2.4 billion, which represented a 12 percent increase from the second quarter last year. Surface Transportation operating income was $645 million, including the insurance recoveries, compared to $422 million for the same period last year. On a comparable basis, 2006 second quarter operating income was a record $519 million, a 23 percent increase over last year, and reflected an operating ratio of 78.6 percent.

Kansas City Southern

It's been 10 years since KCS acquired a stake in Mexico's biggest railroad and just more than a year since the company took full control of it. After reporting second-quarter results, KCS chairman and chief executive Michael R. Haverty said it was time and money well spent.

"We are proud of what has been accomplished to date, and our expectations for future growth far exceed the internal projections we made a decade ago," he said. "The railroad is running better today than I've seen it in all these years."

KCS posted earnings of $19.2 million, or 24 cents a share, on $413.1 million in revenues. That was a big swing from last year's loss of $27.3 million, or 33 cents a share, on $381.1 million in sales. In addition to higher revenues and lower costs fueled by the integration of its U.S. and Mexican operations,

KCS posted an improved operating ratio of 81.2%. That ratio reflects a 3.0 point improvement compared with the first quarter 2006. (With reporting from the Kansas City Star.)

Norfolk Southern

For the second quarter of 2006, Norfolk Southern Corporation reported net income of $375 million compared with $424 million for the same period of 2005. For the first six months, net income was a record $680 million an increase of 10 percent compared with $618 million for the same period of 2005.

Second-quarter railway operating revenues of $2.39 billion were the highest of any quarter in Norfolk Southern's history and improved 11 percent compared with $2.15 billion for the same quarter a year earlier. Railway operating revenues for the first half of 2006 set a six-month record, increasing 14 percent to $4.7 billion compared with $4.1 billion for the first half of 2005. Coal revenues increased 1 percent to a record $584 million.

The second-quarter operating ratio of 71.7 percent, which was the lowest since the Conrail integration. For the first six months, the operating ratio was 73.8 percent, improving 2 percentage points over to the same period in 2005.

Union Pacific

Union Pacific Corporation reported second quarter 2006 net income of $390 million compared to $233 million in the same quarter last year.

Operating income during the second quarter of 2006 was $717 million, up from $468 million reported in the second quarter of 2005.

Quarterly operating revenue was an all-time record $3.9 billion compared to $3.3 billion in the second quarter of 2005.

Commodity revenue set an all-time quarterly record, up 17 percent to $3.7 billion. This compares to $3.2 billion in the second quarter of 2005 and was driven by improved yields, higher fuel surcharge recoveries and a 5 percent increase in volume.

The second quarter 2006 operating ratio improved to 81.7 percent compared to 86 percent in 2005. This was the best operating ratio in over two years.

The Railroad's average quarterly fuel price increased 29 percent versus the year ago quarter, from $1.67 per gallon in 2005 to $2.15 per gallon in the second quarter of 2006. The fuel surcharge recovered 80 percent of the cost in excess of the Railroad's $.75 per gallon base fuel price.

Employee productivity, as measured by gross ton-miles per employee, gained 3 percent versus the year ago quarter.

In the face of record volume, operating metrics remained stable. Average terminal dwell time increased slightly and average quarterly train speed remained flat versus a year ago.

Second quarter railroad commodity revenue increased in the following areas over the same period of 2005:



© 2006 Brotherhood of Locomotive Engineers and Trainmen