Higher Revenues Lift BNSF's Q2 Profits

A 26% gain in revenues helped boost BNSF's net profits in the second quarter of 2021.

BNSF's revenues in the second quarter were $5.8 billion, compared with $4.6 billion in the first quarter of 2021, BNSF said Monday.

Net income was $1.5 billion in the second quarter, a 34% increase from $1.1 billion a year ago.

A 24% increase in rail volumes helped to fuel higher revenues, although the COVID-19 pandemic caused a significant economic slowdown that adversely affected volumes in 2020, said BNSF's (NYSE: BRK-B) parent company, Berkshire Hathaway, on Saturday.

Revenue grew among all of BNSF's business segments. Consumer products revenues rose 33% to $2.1 billion on a 27% increase in volumes. Volumes rose amid a growth in intermodal in both international and domestic shipments driven by increased retail sales, inventory replenishments by retailers and increased e-commerce activity, as well as from growth in automotive shipments, Berkshire Hathaway said.

Industrial products revenues grew 17% to nearly $1.4 billion amid an 18% gain in volumes. However, revenue per car unit was lower in the second quarter than a year ago. Although production and demand in the energy sector was down year-over-year, activity in the construction and building sectors helped to support volumes in the first half of 2021.

Agricultural products revenues rose 19% in the second quarter to $1.3 billion amid a 13% increase in volumes. Higher grain exports and higher volumes of ethanol and related commodities contributed to the volume gains.

Coal's operating revenues jumped $42% to $767 million. The higher volumes in the first half of 2021 were attributable to increased electricity generation and higher natural gas prices and from utilities rebuilding inventory in the second quarter after drawdowns earlier in the year, Berkshire Hathaway said. Coal volumes rose by 32% in the quarter.

Meanwhile, second-quarter 2021 operating expenses were $3.6 billion, compared with $2.9 billion year-over-year, amid higher fuel expenses and increased expenses for compensation and benefits.

The ratio of operating expenses to operating revenues resulted in a second-quarter operating ratio of 60.4% in the second quarter, compared with 61.1% in the second quarter of 2020.

BNSF has approximately 32,500 route miles of track in 28 states, and the railroad also operates in three Canadian provinces.

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