Rail carrier income reports: Third quarter 2007

Burlington Northern Santa Fe

Burlington Northern Santa Fe Corporation reported all-time record quarterly earnings of $1.48 per diluted share, 11 percent higher compared with third-quarter 2006 earnings of $1.33 per diluted share. Highlights included:

Third-quarter 2007 freight revenues increased $133 million, or 4 percent, to an all-time quarterly record of $3.95 billion compared with $3.82 billion in the prior year. Agricultural Products revenues were up $60 million, or 10 percent, to an all-time quarterly record of $682 million for the third-quarter of 2007. Coal revenues rose by $101 million, or 14 percent, to $849 million. Industrial Products revenues increased by $11 million, or 1 percent, to $962 million on 2 percent lower unit volumes. Consumer Products revenues of $1.46 billion were $39 million, or 3 percent less than the third quarter of 2006.

Canadian National Railway

Canadian National Railway Co. reported a 2 percent drop in net income in the third quarter due to weaker forestry shipments and a stronger Canadian dollar.

The railway said it expects those problems to continue through the fourth quarter, but its executives told analysts they are leery about making predictions for 2008 given the current economic volatility. CN said it still predicts earnings per share growth of 5 percent for the full year 2007.

CN reported third-quarter net income of C$485 million, or 96 Canadian cents a share, including a C$14 million favorable tax adjustment. That compared with a profit of C$497 million, or 94 Canadian cents per share, in the same period a year ago. CN said revenue in the quarter ended Sept. 30 was C$2.02 billion, down a touch from C$2.03 billion a year ago as car-loading volumes dropped.

Forestry is CN's largest freight commodity sector, but the strong Canadian dollar has hit both the lumber and paper industries hard. Revenue from forestry-related shipments was off 13 percent. CN's operating ratio worsened to 62 percent in the quarter from 58.5 percent in the third quarter of 2006.

Canadian Pacific Railway

Canadian Pacific Railway Ltd. said third-quarter profit rose 33 percent, buoyed by foreign-exchange gains on its long-term debt. Net income increased to C$218.6 million ($229.1 million), or C$1.41 a share, from C$163.8 million, or C$1.04, a year earlier. Highlights included:

The worst U.S. housing slump in 16 years damped deliveries of lumber and other forestry products, hurting Canadian Pacific and larger rival Canadian National Railway Co. Canadian Pacific said revenue from those shipments fell 21 percent.


CSX Corporation reported third quarter 2007 net earnings of $407 million, or 91 cents per share, including 24 cents per share from discontinued operations. In the same quarter last year, the company reported earnings of $328 million, or 71 cents per share, including 17 cents per share from insurance gains and the resolution of certain tax matters. On a comparable basis, excluding these items, earnings per share from continuing operations increased 24 percent on a year-over-year basis.

Third quarter revenues were $2.5 billion, a 3 percent increase over the third quarter of 2006. This increase was driven by an 8 percent improvement in revenue per unit, more than offsetting the 4 percent decline in volume. The company's Surface Transportation businesses recorded third quarter operating income of $552 million versus $489 million in the same quarter last year. Both quarters included insurance recoveries of $1 million and $15 million, respectively. On a comparable basis, excluding the insurance recoveries, operating income rose 16 percent on a year-over-year basis.

Continued improvements in safety, service and productivity combined to help improve the company's operating ratio to 78 percent for the quarter.

Kansas City Southern

KCS recorded third quarter revenues of $444.1 million, a 6.8% increase over third quarter 2006. Revenue gains were attributable to volume growth in select commodity areas and a continued favorable pricing environment. Highlights included:

For the third quarter, revenues for the Automotive group increased 21.8% on volume growth of 16.6%. Coal revenues remained strong, increasing 16.9% for the quarter with volumes growing by 4.8%. Chemical & Petroleum products revenues experienced 12.7% growth with volume increasing by 5.3%. Agriculture & Minerals revenues increased by 7.0% while posting a 2.2% decrease in volumes. Despite the impact of a depressed U.S. new home building market on building materials, Paper & Forest Products posted a revenue gain of 1.0%, though overall volumes were 12.1% lower. Intermodal revenues, including haulage, were flat quarter-over-quarter, with volumes 6.5% lower.

Norfolk Southern

Norfolk Southern Corp. reported third-quarter 2007 net income of $386 million, or $0.97 per diluted share, compared with $416 million, or $1.02 per diluted share, for the same period of 2006. Results included the effects of Illinois tax legislation enacted during the third quarter of 2007 that reduced net income by $19 million. For third-quarter 2007 vs. third-quarter 2006:

Third-quarter railway operating revenues were $2.35 billion, down 2 percent compared with the same period a year earlier. Fewer intermodal and coal shipments as well as continued weakness in the automotive-related and housing industries contributed to a 4 percent reduction in traffic volume during the quarter compared with the third quarter of 2006.

Union Pacific

Union Pacific reported third quarter 2007 net income of $532 million compared to $420 million in the same quarter last year. Operating income during the third quarter 2007 was $1.0 billion, up from $752 million reported in the third quarter of 2006. Third quarter 2007 highlights include:

Operating revenue set an all-time quarterly record, growing 5 percent to $4.2 billion compared to $4.0 billion in the third quarter 2006. Three business teams, Chemicals, Energy and Intermodal, achieved all-time record revenue in the third quarter 2007.

UP's operating ratio improved 5.1 points versus the third quarter 2006 to 76 percent. The Company's ongoing safety performance improvement was recognized in a periodic actuarial study, driving a $47 million casualty expense reduction ($29 million after tax). This contributed 1.1 points to the operating ratio improvement.

An Illinois tax law change during the third quarter 2007 resulted in a non-cash after tax reduction to earnings of $27 million. This change will increase our future Illinois income taxes.

The Company's third quarter 2007 fuel consumption rate, as measured by gallons per thousand gross ton-miles, was a best-ever quarterly rate of 1.22 versus 1.26 in the third quarter 2006.

The Company repurchased more than 4.5 million common shares at an average share price of $115.93 in the third quarter of 2007. Year-to-date purchases total 10.2 million common shares or 51 percent of the 20 million share repurchase program.

Third quarter railroad commodity revenue summary versus 2006:



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