AP
Burlington Northern profit falls on cleanup charge
Thursday July 24, 5:23 pm ET
By Samantha Bomkamp, AP Business Writer
Burlington Northern 2nd-qtr profit falls on 1-time charge related to environmental cleanup


NEW YORK (AP) -- Railroad operator Burlington Northern Santa Fe Corp. said Thursday its second-quarter earnings fell 19 percent, mostly due to one-time charges related to an environmental cleanup in Montana.

The company also issued a third-quarter profit forecast range mostly below Wall Street's expectations.

Fort Worth, Texas-based Burlington Northern earned $350 million, or $1 per share in the second quarter, compared with $433 million, or $1.20 per share, in the same quarter of 2007.

The 2008 period included charges of 31 cents per share in cleanup costs, and 3 cents per share resulting from a fatal grade crossing accident. Excluding these items, the company would have earned $1.34 per share.

Revenue rose 17 percent to $4.48 billion. The company attributed revenue growth mostly to an improvement in yields and higher fuel surcharges.

Analysts, who typically exclude one-time items, expected a profit of $1.30 per share on revenue of $4.43 billion, according to a Thomson Financial poll.

Agricultural products revenue increased 36 percent, due primarily to strong unit volumes in ethanol, corn, soybeans and wheat. Coal volumes grew 16 percent. Industrial products revenue rose by 10 percent, while consumer products revenue rose 12 percent.

Each of the business units also benefited from increased fuel surcharges the company passes on to its customers. Stronger pricing also helped offset a 3 percent decline in total volumes, the company said. Prices, excluding new business, grew about 6 percent from the year-ago period.

Burlington Northern said it was hurt by the weak U.S. economy, rapidly accelerating fuel prices and "significant damage" to its network resulting from the Midwest floods. The company paid 61 percent more for fuel in the quarter than it did a year earlier.

For the third quarter, the company expects to earn $1.60 to $1.65 per share. Analysts polled by Thomson Financial, on average, expect earnings of $1.65 per share.

Burlington Northern also predicted third-quarter revenue to rise by about 20 percent on growing volumes from corn and soybean crops. Total volumes are expected to post "flat to modest" growth, the company said.

For the full year, the railroad predicted "meaningful" earnings-per-share growth and freight revenue of about $18 billion. The company reported freight revenue of about $15.3 billion in 2007.

The company also announced that planned capital commitments for the year will be about $2.85 billion, $275 million higher than previously disclosed due to the acceleration of some projects, the purchase of new locomotives and flooding costs in the Midwest.

Shares fell $1.18 to close at $98.77.