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Burlington Northern Santa Fe Profit Hit by Charge

The second largest railroad in the United States, Burlington Northern Santa Fe, reported lower net income, citing a $175 million charge related to environmental issues in Montana, a soft economy, high fuel costs and floods in the U.S. Midwest.

The entrance sign to Burlington Northern Santa Fe railway corporate headquarters campus is shown in Fort Worth, Texas Sunday, Jan. 22, 2006. Burlington Northern Santa Fe Corp., the nation's second largest railroad company, said its fourth-quarter earnings jumped 24 percent as strong demand drove revenue.  (AP Photo/L.M. Otero)
L.m. Otero
The entrance sign to Burlington Northern Santa Fe railway corporate headquarters campus is shown in Fort Worth, Texas Sunday, Jan. 22, 2006. Burlington Northern Santa Fe Corp., the nation's second largest railroad company, said its fourth-quarter earnings jumped 24 percent as strong demand drove revenue. (AP Photo/L.M. Otero)

But the railroad reported continued strong pricing despite a weak economy.

The Ft Worth, Texas -based company reported second-quarter net income on Thursday of $350 million or $1 a share, compared to $433 million or $1.20 a share a year earlier.

BNSF said the environmental charge related to "environmental matters" in Montana was equivalent to 31 cents per share. The company also reported a $15 million, or 3 cent per share, charge for additional personal injury accruals.

Excluding those items, BNSF earned $1.34 per share. Analysts had on average expected earnings per share for the quarter of $1.30 excluding items, according to Reuters Estimates. On that basis, the company's profit came in above forecasts.

Revenue in the quarter rose to $4.49 billion from $3.84 billion a year earlier. Analysts had expected revenue of $4.44 billion.

Fuel costs in the quarter rose 61 percent to $1.25 billion from $771 million. Freight volumes fell 3 percent, but average revenue per carload rose 20 percent.

"It looks like the pricing power for the railroads persists," said Keith Schoonmaker, an analyst at Morningstar. "They (BNSF) have managed to introduce tremendous price increases that produce a pretty attractive top line figure."