Burlington Northern Profit Rises, Tops Forecasts

No. 2 U.S. railroad Burlington Northern Santa Fe on Wednesday reported a better-than-expected quarterly net profit, as higher freight prices and fuel surcharges offset a 7 percent decline in volumes during the quarter as the U.S. economy slowed.

"The second half of the fourth quarter saw a significant downshift in economic activity related to the global recession," Chief Executive Matt Rose said in a statement. "Given the current economic uncertainty, we are focused on effectively managing our resources and driving continued productivity throughout our organization."

The Ft. Worth, Texas -based company said fourth-quarter net income rose to $615 million or $1.79 cents a share, from $517 million or $1.46 a share a year earlier.

Analysts had expected earnings per share for the quarter of $1.74, according to Reuters Estimates.

BNSF said revenue rose to $4.37 billion from $4.25 billion in the same quarter in 2007.

The railroad also announced that it planned capital expenditures of $2.7 billion in 2009, around $150 million less than in 2008.

Like the other major U.S. railroads—Union Pacific , CSX and Norfolk Southern —BNSF has reported robust profits in recent quarters due to strong pricing, despite falling freight volumes as the U.S. economy has weakened.

But analysts have warned that the railroads may not be able to maintain that pricing power if the U.S. remains in a prolonged economic slump.

CSX late on Tuesday reported a 10 percent decline in freight volumes in the fourth quarter, but officials said the railroad still expects to raise its prices by between 5 percent and 6 percent in 2009.

Warren Buffett's Berkshire Hathaway said in a filing with the U.S. Securities and Exchange Commission late on Tuesday that it has increased its stake in BNSF to 21.8 percent, having spent about $271 million on the railroad's stock this month.

Buffett told shareholders at Omaha, Nebraska -based Berkshire's annual meeting in May 2007 that the railroad business' competitive prospects had improved.

• Get After-Hour Quotes for Burlington Northern

Copyright 2009 Reuters. Click for restrictions.