The Global Demographic Tailwind

[DewDiligence]

BNI Tops Street View Despite Lower 2Q08 Revenue

[BNI is one of the two major US railroads that operates west of Chicago. It fits the underlying premise of this message board insofar as it ships large amounts of US grain (and smaller quantities of finished goods) from the farm belt to western ports for export to developing markets in Asia.]

http://www.reuters.com/article/marketsNews/idINN2340516920090723

›Thu Jul 23, 2009 4:58pm EDT

DETROIT, July 23 (Reuters) - No. 2 U.S. railroad Burlington Northern Santa Fe Corp (BNI) on Thursday reported a better-than-expected net profit, with lower fuel expenses and aggressive cost controls offsetting a 26 percent decline in revenue as the recession continued to hurt freight volumes.

The railroad said volumes at economically sensitive business units, which it did not specify, have begun to stabilize. BNSF hauls a variety of commodities such as coal, grain, lumber, construction materials, automobiles and consumer goods.

The Ft Worth, Texas-based company reported second-quarter net income of $404 million or $1.18 a share, compared with $350 million or $1.00 a share a year earlier. The company's earnings for the same quarter a year earlier were also affected by a one-time 31 cent per share charge.

Wall Street analysts had on average expected earnings per share for the latest quarter of $1.00, according to Reuters Estimates.

Revenue in the quarter fell to $3.32 billion from $4.48 billion. Analysts had expected revenue of $3.74 billion, according to Reuters Estimates.

"BNSF had another strong quarter of cost control in an extremely difficult economic environment," Chief Executive Matthew Rose said in a statement. "Because of our continued focus on productivity combined with our long-term market opportunities, we are well positioned to benefit when the economy recovers."

Like other major U.S. railroads, BNSF had reported robust profits in recent quarters as strong pricing helped them offset falling freight volumes. But analysts have warned that a prolonged recession could undermine their pricing power.

All the U.S. railroads have seen shipments of consumer goods, construction materials and automobiles badly hurt by the recession.‹