Buffett praises BNSF for strong year despite quarterly profit decline
Warren Buffett had nice things to say about Fort Worth-based BNSF Railway in his annual letter to shareholders, even as the railroad’s profits are declining.
Berkshire Hathaway said BNSF’s profit sank 9.2 percent in the last three months of 2015 to $1.08 billion, pressured by lower demand for coal. Volumes may fall this year as low fuel prices limit shipments of petroleum products and material used for extracting oil, the company said.
For all of 2015, net earnings at BNSF increased nearly 10 percent to $4.25 billion, despite a 5.5 percent decline in revenues to $21.98 billion. Buffett, Berkshire’s chairman and CEO, said he expects lower earnings at BNSF in 2016.
In his widely-read shareholders letter, Buffett praised the railroad for improving service through record capital investments and delivering strong earnings for the whole year while the industry struggled.
“For most American railroads, 2015 was a disappointing year,” Buffett wrote. “Aggregate ton-miles fell, and earnings weakened as well. BNSF, however, maintained volume, and pre-tax income rose to a record $6.8 billion (a gain of $606 million from 2014). Matt Rose and Carl Ice, the managers of BNSF, have my thanks and deserve yours.”
Overall, Berkshire Hathaway profits climbed 32 percent in the fourth quarter on investments and earnings from the company’s expanding stable of operating businesses. Net income rose to $5.48 billion, or $3,333 a share, from $4.16 billion, or $2,529, a year earlier, the company said Saturday. Operating earnings, which exclude some investment results, were $2,843 a share, beating the average $2,814 estimate of three analysts surveyed by Bloomberg.
During an appearance on CNBC Monday, Buffett, 85, said the U.S. economy appears weaker than he thought it would be as recently as last fall, but that doesn’t change his optimistic long-term view of the country’s prospects.
“Business is a little softer in many places than I anticipated four or five months ago. That doesn’t mean it’s in reverse,” he said.
Over the past five decades, Buffett has built the Omaha, Neb.-based company into a sprawling enterprise with a stock portfolio valued at more than $110 billion and interests in insurance, energy, manufacturing, media, retail and transportation. In Fort Worth, Berkshire also owns Acme Brick, Justin Brands and TTI.
Last year, Berkshire bought Van Tuyl Group, the largest privately-owned network of auto dealerships, with plans to base Berkshire Hathaway Automotive in Dallas. It also struck one of its biggest deals ever: the $37.2 billion buyout of aerospace manufacturer Precision Castparts.
This report includes material from Bloomberg News, The Associated Press and the Star-Telegram archives.
This story was originally published February 29, 2016 at 9:54 AM with the headline "Buffett praises BNSF for strong year despite quarterly profit decline."