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BNSF 3Q beats forecasts
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October 26, 1999: 11:32 a.m. ET
Record income, revenue lets railroad follow competitor's strong quarter
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NEW YORK (CNNfn) - Burlington Northern Santa Fe Corp. (BNSF) Tuesday became the third major North American railroad to report much stronger than expected third-quarter earnings, suggesting that merger savings are starting to pay benefits for investors in the consolidating industry.
BNSF (BNI) posted record third-quarter income of $325 million, or 70 cents a diluted share, excluding a gain from sale of some rail lines. Analysts surveyed by First Call had expected 67 cents a share for the quarter.
With the gain on line sales, the railroad had net income of $348 million, or 75 cents a share, in the quarter. The company posted net income of $317 million, or 66 cents a share, a year earlier.
Last week, Union Pacific Corp. (UNP) and Canadian Pacific Ltd. (CP) both posted better-than- expected results as well. The trend will be put to a test later this week when results are released by two major Eastern railroads, CSX Corp. (CSX) and Norfolk Southern Corp. (NSC), both of which have seen trouble integrating their purchase of Conrail last quarter. Analysts are expecting a large drop in earnings at Norfolk Southern, but an improvement at CSX.
Strong revenue, operating results
BNSF posted record third-quarter revenue of $2.35 billion, up $52 million from a year earlier. Revenue for the Fort Worth, Texas-based railroad's automotive business rose 17 percent, while revenue for the grain business increased 16 percent.
Operating expenses as a percentage of revenue, the key measure of a railroad's financial performance, improved to 73.1 percent from 73.2 percent.
For the first nine months of the year, the company had income of $818 million, or $1.74 a diluted share, without special items. For the same period last year, income before special items was $827 million, or $1.73 a share. The latest period per-share figures were bolstered by a share repurchase program over the past year.
Including special items the company had nine-month net income of $822 million, or $1.75 a diluted share, compared with year-earlier results of $859 million, or $1.80 a share.
Revenue rose 1 percent to $6.73 billion for the nine-month period.
BNSF shares rose 7/16 to 29-7/16 in Tuesday morning trading.
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