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BNSF’s net income grew 10% in Q1 despite volume dip

BNSF’s first-quarter 2022 net profit rose 10% despite a 3% decline in volumes, the company reported Monday.

First-quarter 2022 net income was $1.37 billion, compared with $1.25 billion in the first quarter of 2021. BNSF is a privately held company whose parent is Berkshire Hathaway (NYSE: BRK.B).

Total revenues grew 10% to nearly $5.97 billion amid a 14% gain in average revenue per unit, which in turn was supported by higher fuel surcharge revenue. 

Volumes slipped 3%, with gains in industrial products and coal volumes unable to offset declines in consumer and agricultural products.

Consumer products volumes, which includes BNSF’s intermodal traffic, slipped 8% amid lower international intermodal volumes and lower automotive shipments. However, domestic intermodal volumes rose in the quarter, BNSF said, while overall revenue rose 10% to $2.08 billion.

Agricultural products volumes slipped 4% on lower grain exports, although ethanol volumes overall were higher year-over-year. Revenue increased 4% to nearly $1.36 billion.

Industrial products volumes grew 1% while revenues increased to nearly $1.3 billion.

Coal volumes climbed 14% on increased electricity generation, higher natural gas prices and improved export demand, BNSF said. Coal revenues jumped 30% to $889 millon.

Meanwhile, operating expenses grew 12% to $3.9 billion amid higher fuel expenses.

Operating income rose 8% to $2 billion, while operating ratio (OR) was 64.6%, compared with 63.7% a year ago. Investors sometimes use OR to gauge the financial health of a company, with a lower OR implying improved health.  

The unveiling of BNSF’s first-quarter results comes as Berkshire Hathaway held its annual shareholders meeting in Omaha, Nebraska, this past weekend. 

Some protesters gathered outside this year’s meeting, according to local news reports. Members of the Brotherhood of Locomotive Engineers and Trainmen and the International Association of Sheet Metal, Air, Rail and Transportation Workers — Transportation Division (SMART-TD) were protesting BNSF’s new attendance policy, which went into effect on Feb. 1. The unions say the policy is overly restrictive and discourages workers from taking days off.

Earlier this year, SMART-TD and BNSF were embroiled in a lawsuit over BNSF’s attendance policy. The unions are seeking arbitration.

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