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BNSF’s fourth-quarter operating income slips 15%

BNSF’s operating income for the fourth quarter of 2022 totaled $2.1 billion, down 15% from Q4 2021, the privately owned western U.S railroad reported Monday.

BNSF is owned by Berkshire Hathaway (NYSE: BRK.B), which releases some financial metrics related to the railroad’s performance.

The railroad saw a 5% increase in Q4 revenue year over year (y/y) to nearly $6.6 billion. Within that, freight revenue grew 6% to $6.2 billion. 

BNSF said the revenue growth was primarily due to an increase in average revenue per carload/unit of 17% in the fourth quarter. That increase in turn came from higher fuel surcharge revenue driven by higher fuel prices. Each of BNSF’s four segments — consumer, industrial and agricultural products, along with coal — posted y/y gains for overall revenue and revenue per carload/unit.

But the railroad also saw a 9% decline in total volumes in the fourth quarter, including the following:

  • Consumer product volumes fell 9% amid lower intermodal shipments resulting from supply chain challenges and lower West Coast imports.
  • Industrial product volumes slipped 11% because of a decrease in petroleum-related shipments due to lower demand for crude-by-rail shipments and network challenges for chemical, steel and taconite shipments.
  • Agricultural product volumes dipped 4% due to lower grain exports and fertilizer shipments.
  • Coal volumes fell 4% linked to network service challenges. 

Meanwhile, operating expenses also cut into BNSF’s quarterly profits, with expenses growing 17% to $4.5 billion due to “significant increases” in fuel costs, as well as higher compensation and benefits expenses. 

As a result, fourth-quarter operating income was down 15% while operating ratio — a financial metric sometimes used to gauge the financial health of a company  — rose to 67.8% compared with 60% in Q4 2021.

BNSF reiterated that its capital expenditures for 2023 are projected at $3.9 billion, an increase from $3.67 billion in ’22. Of that, BNSF expects to spend $2.85 billion on maintenance and track infrastructure replacement, $709 million on expansion and efficiency projects to support its intermodal, automotive, agricultural and industrial product customers, and $402 million on equipment acquisitions. 

Earlier this month, BNSF announced its customers invested more than $1.6 billion in 2022 for projects that will be served by the railroad’s line. Large investments include those from the Northwest Seaport Alliance, ABDW Logistics, HollyFrontier and GAF Materials.

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