Carrier third quarter 2005 income reports

Burlington Northern Santa Fe

BNSF reported third quarter revenues of $3.22 billion, which is an all-time record high for the railway. Revenue rose to record levels in spite of fuel surcharges of $296 million, nearly triple the $95 million paid in the third-quarter of 2004.

BNSF experienced revenue increases in all four of the Company's business groups during the third quarter. Consumer Products revenues increased $234 million to $1,331 million, largely from strong volume increases across most of the business sectors. Industrial Products revenues increased $109 million to $743 million. Agricultural Products revenues were up $104 million to $522 million, due largely to strong exports through the Gulf and Pacific Northwest ports. Coal revenues rose by $33 million to $622 million.

Operating expenses for the third-quarter of 2005 were $2.54 billion. This compares with third-quarter 2004 operating expenses of $2.69 billion.

The railway's quarterly operating ratio was 75.8 percent, which was an improvement over the 2005 second quarter.

Canadian National Railway

Revenues at Canadian National for third quarter 2005 increased to $1,810 million, with CN's grain and fertilizers, coal, and intermodal segments registering double-digit revenue growth. Forest products, metals and minerals, and automotive revenues also improved.

CN boasted a record net income of $411 million this quarter and operating income of $665 million. CN also has a record nine-month free cash flow of $1,058 million (all figures in Canadian dollars).

CN's revenue performance was driven largely by increased freight rates. An important contributor to these rate increases was a higher fuel surcharge owing to increased crude oil prices. Partly offsetting revenue gains during the quarter was the unfavourable $80 million translation impact of the stronger Canadian dollar on U.S.-dollar denominated revenues. The appreciation of the Canadian dollar reduced CN's third-quarter 2005 net income by approximately $15 million.

The railway's operating ratio for the quarter was 63.3 percent, an improvement of 2.1 percent.

Canadian Pacific Railway

Canadian Pacific Railway reported net income increased 15 percent to $204 million in the third quarter of 2005, compared with $177 million in the same period of 2004. Revenue increased to $1,105 million, a third-quarter record, from $990 million in third-quarter 2004. There were double-digit growth rates in four of CPR's business lines, led by coal at 35 percent and intermodal at 13 percent (all figures in Canadian dollars).

Operating expenses before other specified items were $855 million in third quarter 2005, compared with $771 million in the same period of 2004. The increase was mainly due to higher fuel and compensation and benefits costs. Fuel prices reached record highs, however, CPR recovered almost all of the increase through revenue from its surcharge mechanism, as well as hedging and fuel efficiency measures.

For the first nine months of 2005, net income is up 44 percent to $408 million compared with $284 million in 2004. Operating ratio for the quarter improved to 77.4 percent and is at 78.3 percent for the first nine months of 2005.

CSX Transportation

CSX Corporation reported third quarter net earnings of $164 million, a 31 percent increase in earnings of $123 from the same quarter in 2004. In the quarter, the company's core surface transportation businesses, which include rail and intermodal, achieved:

Hurricane Katrina, which made landfall near Buras, La., on Aug. 29, damaged a CSX line running 85 miles east of New Orleans and five major bridges. Repairs will continue through early next year. CSX says the total cost of the storm will total $250 million, but it has insurance that will cover the vast majority of the expenses. CSX's coal revenue increased 16 percent to $491 million, while merchandise shipment revenue rose 8 percent to $1.05 billion.

CSX's operating ratio was 83.0 percent, an improvement of 4.3 points from the same quarter last year.

Kansas City Southern

For the third quarter of 2005, Kansas City Southern set an all-time quarterly record with consolidated revenues of $384.6 million, which were a result of the 2005 acquisitions. KCS also boasted a consolidated net income of $110.5 million.

KCS now includes U.S. rail operations (Kansas City Southern Railway Company and Texas Mexican Railway Company) and Mexican rail operations (TFM, S.A. de C.V.). The record consolidated revenues represent an increase of $221.4 million over 2004, substantially as a result of the acquisition of the Texas Mexican Railway Company and TFM.

Consolidated operating expenses for the third quarter of 2005 were $386.5 million versus $144.0 million in the third quarter of 2004, primarily due to the previously referenced acquisitions, and increased claims reserves. In July, hurricane Emily reduced operating income from Mexican operations by $1.8 million. In September, hurricanes Katrina and Rita negatively impacted U.S. operations by approximately $7.8 million and Mexican operations by $2.4 million.

Norfolk Southern

For the third quarter of 2005, Norfolk Southern Corporation reported net income of $301 million, compared with $288 million for the same period of 2004. Third-quarter 2004 results included a gain from the Conrail corporate reorganization that increased reported results by $53 million. Third-quarter 2005 net income was 28 percent higher than the $235 million in the same period of 2004 excluding the gain.

Railway operating revenues for the quarter increased 16 percent to a record $2.16 billion. Income from railway operations improved 13 percent to $528 million. Intermodal revenue climbed 17 percent to an all-time high. Coal revenue was up 22 percent on record volumes and merchandise revenue increased 13 percent. For the first nine months, railway operating revenues set a record, rising 17 percent to $6.27 billion compared with $5.36 billion during the first nine months of 2004.

The railroad's operating ratio was 75.5 percent.

Union Pacific

Union Pacific Corporation reported 2005 third quarter net income of $369 million, which includes the $118 million after-tax non-cash income tax expense reduction that the company announced on October 7, 2005. Excluding the tax item, net income would have been $251 million. This compares to net income of $202 million in the third quarter of 2004.

For the quarter, Union Pacific reported operating income of $481 million, up 15 percent compared to $418 million for the same period in 2004.

The railroad's operating revenue grew 13 percent to $3.5 billion versus 2004. Its operating margin improved to 13.9 percent in the third quarter of 2005 compared to 13.6 percent in 2004. UP's total commodity revenue reached best-ever quarterly levels, reflecting a 1 percent growth in carloads to a record 2.4 million loads, along with yield improvements and fuel cost recovery under the company's surcharge programs

The Railroad's average quarterly fuel price including transportation and taxes was $1.88 per gallon versus $1.25 per gallon a year ago

Two of the Railroad's three key operating metrics, as reported to the Association of American Railroads, improved in the third quarter of 2005 versus the third quarter of 2004. Higher train speeds, lower terminal dwell times and smaller rail car inventories would all be indicators of better system fluidity. In the face of record demand, average terminal dwell time decreased 7 percent from 30.1 hours to 28.1 hours and rail car inventory decreased 1 percent to 318,626 cars

Average third quarter train speed fell slightly from 21.8 mph in 2004 to 21.6 mph in the third quarter of 2005. Average train speeds have increased more than 1 mph during the first three quarters of 2005 from an average of 20.5 mph in the fourth quarter of 2004.

Overall, commodity revenue was up 12 percent versus the third quarter of 2004. The breakdown is as follows: Agricultural up 27 percent; Industrial products up 16 percent; Intermodal up 13 percent; Chemicals up 9 percent; Automotive up 4 percent; and Energy up 4 percent.

Operating ratio for the quarter was 86.1 percent. Year to date operating ratio is 87.3 percent.


© 2005 Brotherhood of Locomotive Engineers and Trainmen