Burlington Northern Santa Fe Ups Revenues by Volumes, Surcharge



BNSF’s 2Q17 revenues

In this part of the series, we’ll look at the 2Q17 revenues for Burlington Northern Santa Fe (or BNSF) (BRK.B). The company’s 2Q17 total revenues were $5.2 billion against $4.6 billion in the same quarter last year. That translates to a rise of $665.0 million or 14.5% year-over-year.

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2Q17 volumes and average revenue per car

BNSF’s 2Q17 revenues were primarily driven by the overall rise in volumes. Shipments in the same quarter rose 8.7%. Higher coal volumes along with consumer and industrial products pushed up volumes in 2Q17. BSNF’s average revenue per car rose 4.1% to $1,991 from $1,913 in the first six months of the year. A business mix change and higher fuel surcharge revenues from year-over-year higher fuel prices resulted in a higher average revenue per car.

After recording a fall in year-over-year revenues for eight consecutive quarters prior to 1Q17, BNSF achieved a double-digit rise in revenues in 2Q17. Until 1Q15, the company’s revenue growth was in the green zone but fell into the red zone after its 2Q15 results. Much of the fall last year can be attributed to the weakness in energy commodities.

Other Class I railroads’ 2Q17 revenues

This year started on a positive note with hopes of a revival in coal. Overall coal prices rose reasonably in the first half of 2017 with President Trump’s views on conventional energy sources. His America First policy also led to a rise in US industrial production in the same period. That led to top-line growth for BNSF and its peers. Let’s look at revenue changes for BNSF’s peers in 2Q17.

  • Union Pacific (UNP): rose 10.0%
  • Canadian Pacific Railway (CP): rose 13.0%
  • Kansas City Southern (KSU): rose 15.0%
  • CSX (CSX): rose 8.0%
  • Norfolk Southern (NSC): rose 7.0%
  • Genesee & Wyoming (GWR): rose 7.8%

If you want exposure to the transportation and logistics sector, you can invest in the iShares Transportation Average (IYT). US-originated rail companies make up 24.3% of the portfolio holdings of IYT.

Next, we’ll analyze BNSF’s Consumer Products segment’s performance in 2Q17.


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