Rail News

Burlington Northern Santa Fe

Burlington Northern Santa Fe Corp. reported that its third-quarter earnings fell 13.1 percent, hurt by flat freight revenues, and said it would cut about 400 nonunion jobs.

BNSF said it posted net income of $225 million, or 58 cents per diluted share, compared with $259 million, or 64 cents per diluted share, a year earlier.

In July, the company said third-quarter revenues would fall slightly from last year, due to lost business from automaker General Motors Corp.

Freight revenues for the 2001 third quarter were $2.31 billion, even with last year on slightly higher ton-miles compared with the same 2000 period. Freight revenues include a $32 million settlement related to a transportation contract. Agricultural Commodities revenues increased $11 million, or 3 percent, to $331 million, primarily due to an increased demand for corn.

Operating expenses of $1.84 billion were $69 million higher than the 2000 third quarter. Compensation and benefits expense was $40 million higher than 2000 due to higher wages, incentive compensation accruals and health and welfare costs. Operating income was $502 million for the third quarter 2001 compared with $571 million a year ago.

Canadian Pacific Railway

Canadian Pacific Railway Co. said it will continue to cut costs, and possibly another 500 jobs, as it journeys into an uncertain economy. The railway also said it has carried out the 500 job cuts it announced in April.

Chief financial officer Mike Waites said the company will continue to examine its labor costs and might cut another 500 jobs over the next 12 to 18 months. CPR has about 17,000 employees. CPR became an independently traded firm in October, after Canadian Pacific Ltd. was replaced by its five component businesses.

One-time income tax benefits related to the spinoff helped CPR report a 42 percent increase in third-quarter profit. Including one-time gains and charges, CPR reported profit of C$136.1 million or 86 cents a share for the three months ended Sept. 30, compared with C$95.8 million or 60 cents a year earlier. Excluding one-time items, profit was C$99 million or 62 cents compared with C$96 million or 60 cents a year earlier.

Revenue was down slightly to C$898.2 million from C$910.4 million. Revenue from automotive shipments was up 15.1 per cent in the quarter, while bulk shipments, such as coal and fertilizer, were up 6.1 per cent. Forest products were down 7.5 per cent, while grain shipments fell 5.8 per cent in the quarter.

Kansas City Southern

Kansas City Southern Industries Inc. reported that its third-quarter revenues were flat and net earnings were down. Nevertheless, the results were encouraging for the railroad company.

For the three months ended Sept. 30, Kansas City Southern earned $9 million, or 15 cents a share, on $144.6 million in revenues. During the same time last year, the company earned $23.2 million, or 39 cents a share, on $144.1 million in revenues.

The 2000 third-quarter results included a $23.4 million gain from the spinoff of Stilwell Financial Inc., the company’s financial services unit. Before such items, Kansas City Southern reported $9 million in income from continuing operations for the 2001 third quarter, compared with $2.6 million during the same period last year.

For the first nine months of the year, Kansas City Southern earned $19.6 million, or 32 cents a share, on $431.8 million in revenues. During the same time last year — which again includes a big gain from the Stilwell spinoff — the company earned $376.9 million, or $6.39 a share, on $437.4 million in revenues.

Union Pacific Railroad

The Union Pacific Corp. reported that its third-quarter earnings rose 4 percent on record productivity, moderating fuel prices and cost controls.

It also forecast that fourth-quarter earnings would be slightly higher than those of the same period last year.

Union Pacific, which operates North America’s biggest railroad, reported net income of $267 million, or $1.04 per diluted share, compared with net income of $256 million, or $1.00 per diluted share, a year earlier. Revenues declined slightly to $3.03 billion from $3.05 billion.

Union Pacific said record employee productivity and cost-control measures, combined with moderating fuel prices, were key factors in its improved performance. Its operating ratio — or the cost of generating one dollar of revenue — fell to 79.7 percent from 80.1 percent from last year, making it the best quarterly performance since 1996, when it merged with Southern Pacific Corp.

Union Pacific also said it is taking advantage of lower fuel costs by locking them in at current prices. It paid 86 cents per gallon, compared with 92 cents one year ago, and expects a reduction in fuel costs in the fourth quarter.

Canadian National Railway

Canadian National Railway Co. reported increased third-quarter profit by 17% despite a slight decrease in revenue.

Canada’s largest railway company posted net income of C$252 million on revenue of C$1.3 billion for the quarter ended Sept. 30. While revenue for the quarter was slightly lower than last year, the company cut operating expenses by 3% to C$895 million, improving the company’s industry-leading operating ratio to 67.5%. The company’s diluted earnings of $1.21 per share, excluding a non-recurring deferred income tax recovery, beat analysts’ expectations by a penny.

Like the other five major North American railway companies, CN has been in cost-reduction mode to counter falling shipments and revenue brought on by the economic slowdown. While CN reported revenue gains in some business units, the company made clear the name of the game would continue to be cutting expenses to match weakening revenue.

CN President and Chief Executive Officer Paul M. Tellier said: “CN’s performance during the quarter was solid. In a challenging economic environment, we delivered double-digit gains in earnings and earnings per share… CN has clearly demonstrated financial durability in tough economic conditions.”

CSX Transportation

CSX Corporation reported third-quarter earnings from continuing operations of $100 million, or 47 cents per diluted share, up 69 percent from $59 million, or 28 cents per diluted share, in the same period a year ago.

In the 2000 third quarter, CSX had an after-tax gain of $365 million, or $1.73 per share, from the sale of the company’s contract logistics business. Including discontinued operations and the gain, net earnings for the 2000 third quarter totaled $427 million, or $2.02 per share.

CSX said that it has largely completed a forward purchase fuel program at the railroad to take advantage of current prices. Approximately 50 percent of the railroad’s diesel fuel requirements for the next 15 months will be locked in under the program.

Third-quarter operating income at CSX’s rail and intermodal businesses totaled $237 million versus $190 million a year ago. While carloads were down 2.6 percent, revenues were about the same for both periods, approximately $1.8 billion. The operating ratio, which measures costs as a percentage of revenues, was 86.7 percent, improving 2.7 percentage points from 89.4 percent in the 2000 third quarter.

CSX earned $228 million, or $1.07 per share, from continuing operations for the first nine months of 2001, compared with $132 million, or 62 cents per share, for the same period last year.

Norfolk Southern

Despite flagging sales due to the slowing economy, Norfolk Southern Corp. reported third-quarter profits that were 49 percent better than last year’s third quarter and posted per-share earnings that met Wall Street expectations.

The Norfolk-based railroad holding company made $79 million, or 20 cents a share, compared with net operating income of $53 million, or 14 cents a share, in the third quarter of 2000.

The company’s overall results in the previous third quarter were fattened 12 cents a share by a nonrecurring, $46 million sale of timber properties through its Pocahontas Land Corp. arm.

The railroad’s increased operating profit this quarter came mostly from cutting costs. Operating revenues for the quarter fell 1.8 percent to $1.51 billion. Decreases of 1.8 percent in general merchandise revenues, to $862 million, and of 4.8 percent in intermodal revenue, to $280 million, more than offset a 1 percent increase in coal revenue to $366 million. Intermodal revenues come from ocean shipping containers moved by rail and then trucks.

 

2001 Brotherhood of Locomotive Engineers