BNSF reports higher quarterly profit even as revenue declines


Declining shipments of oil and frac sand due to the falloff in drilling associated with lower oil prices contributed to lower revenue at BNSF Railway in the third quarter, but improved service resulted in a higher profit, parent Berkshire Hathaway reported late Friday.

Performance at the Fort Worth-based railroad was detailed in a quarterly filing made by Berkshire, Warren Buffett’s Nebraska-based conglomerate, with the Securities and Exchange Commission.

For the third quarter, BNSF reported net income of $1.16 billion, up from $1.04 billion in the third quarter of 2014. And for the first nine months of 2015, railroad profits increased by 18 percent $3.16 billion as the company recovered from lengthy delays and backlogs a year ago.

Revenues for the three months ended Sept. 30 fell 5 percent to $5.6 billion. Berkshire said BNSF’s freight revenues from industrial products, including oil trains, decreased by 13 percent in the quarter to $1.4 billion.

Revenues from shipments of coal and consumer products also declined (though shipments in each category actually increased) while revenues amd shipments of agricultural shipments picked up. Overall revenue was hurt due to a 50 percent decline in fuel surcharges because of lower fuel prices. Fuel expenses declined $453 million, or 40 percent, for the third quarter.

Berkshire attributed the higher profits at BNSF to improved oeprating performance, thanks to capital investments to expand capacity and workers. In the first nine months of 2015, Berkshire said BNSF spent $4.1 billion on capital improvements.

Overall, Berkshire Hathaway’s third-quarter profit more than doubled as the merger of Kraft and Heinz boosted the value of its stake in the food giant.

The company said it earned $9.4 billion, or $5,737 per Class A share. That’s up from $4.6 billion, or $2,811 per share, in last year’s third quarter. Berkshire’s revenue grew 15 percent to nearly $59 billion.

Berkshire holds about 27 percent of the stock in the Kraft Heinz Food Co., and it recorded a $4.4 billion after-tax gain as the result of the merger that was completed over the summer.

Operating profit at Berkshire’s insurance companies, which include Geico and General Reinsurance, fell to $414 million from last year’s $629 million as the company wrote less reinsurance and covered a $44 million loss related to an explosion in Tianjin, China.

“It’s a mediocre quarter,” S&P Capital IQ analyst Cathy Seifert said. “This is a large, complex company with a lot of moving parts, but increasingly it seems like the gains are coming from acquisitions.”

This article includes material from The Associated Press.