Railroads report mixed 4th quqarter income

For the fourth quarter of 1999, Richmond, Va.-based CSX posted a net loss of $25 million, or 12 cents a share on a fully diluted basis, compared with net income of $108 million, or 51 cents a diluted share, in the year-earlier period. Revenue increased 10% to $2.75 billion.

The latest results include a charge of $34 million, or 16 cents a share, for a work-force reduction program at the company's rail and intermodal units; and a loss of $35 million, or 16 cents a share, from the sale of the Sea-Land's unit's international liner business.

CSX had warned fourth-quarter results would be disappointing, reflecting railroad freight congestion and higher expenses related to its takeover of Conrail operations last June.

CSX Transportation also experienced difficulties handling fall peak traffic volumes and encountered higher costs to relieve congestion in parts of the system. The rail problems began after CSX took over operation of major parts of Conrail on June 1.

The company also warned that first-quarter earnings for 2000 will be "well below" its first-quarter earnings from a year ago.

Transport, energy and hotel conglomerate Canadian Pacific Ltd. said its fourth-quarter profit rose 17 percent to a record level, boosted by higher oil prices and cost-cutting.

The Calgary-based company, known for its cross-Canada railroad and opulent resort hotels, said fourth-quarter net income rose to C$307 million, or 93 Canadian cents a share, from C$263 million, or 79 cents, in the year-earlier period.

Canadian Pacific Railway had record fourth-quarter net income of C$121 million, up C$8 million from the year-earlier period, because of growing revenue from the shipment of automotive, industrial and forest products.

Burlington Northern Santa Fe Corp. reported fourth-quarter net income of $315 million, up from $296 million a year earlier.

Revenue increased by $76 million to a record $2.37 billion.

Intermodal revenue increased $42 million, or 7%, to $679 million. Carload revenue reached $645 million, up 3%. Automotive revenue jumped 12% to $124 million, primarily due to growth in vehicle shipments.

Operating income in the quarter was $603 million, compared with $568 million for the same period in 1998.

For the year, net income inched up to $1.13 billion from $1.12 billion in 1998. Revenue increased by 2% to $9.1 billion.

BNSF, based in Fort Worth, Texas, and the Canadian National Railway announced last month that they intend to merge, creating the first end-to-end North American railroad.

Union Pacific Corp.'s net income for the October-December period was $242 million, or 95 cents a share, well above the 88 cents expected by financial analysts.

That compared with net income in the final quarter of 1998 of $96 million, or 39 cents a share, excluding special items. Including those items, such as merger-related expenses, the railroad posted a loss of $189 million, or 77 cents a share, in the final quarter of 1998.

Revenue in the fourth quarter was $2.87 billion, up 7 percent from $2.68 billion a year earlier.

The nation's largest railroad struggled in 1997 and 1998 with clogged rail lines and losses as it implemented its 1996 merger with the aging Southern Pacific Rail Co. It invested heavily in updating track and hiring new workers. The railroad said those investments are paying off.

Union Pacific said its 1999 net income was $810 million, or $3.22 cents a share, compared with a net loss excluding special items of $86 million, or 35 cents a share, in 1998. Including special items, such as merger-related costs, Union Pacific lost $633 million, or $2.57 a share, in 1998.

Canadian National Railway Inc. earned $213 million, or $1.03 a share, in the fourth quarter, compared with earnings of $182 million, or 94 cents a share, in the comparable 1998 quarter, the Journal of Commerce reports.

For the full year, CN earned $751 million, or $3.74 a share, a 25% increase from $598 million, or $1.44 a share in 1998.

Once one of North America's least efficient rail carriers before it was privatized by the Canadian government, CN improved its industry-leading ratio of operating expenses to operating revenue from 73.2% in the 1998 fourth quarter to 70.7% in 1999.

The operating ratio for the full year was 72%, 3.1 points better than the 75.1% recorded in 1998.

Revenue increased 4% to $1.39 billion in the final 1999 quarter, and operating expenses increased less than 1% to $980 million.

CN said its results reflect the consolidation of Illinois Central Corp. CN took control of IC on July 1, and consolidated IC's financial statements retroactive to Jan. 1, 1999.

Operating income in the final 1999 quarter rose 14% to a record $407 million from $356 million a year earlier.

Norfolk Southern Corp., continuing to struggle with its integration of 58% of Conrail operations, earned a meager $31 million, or 8 cents a share, in the fourth quarter.

In the comparable 1998 period, which did not include Conrail operations or costs, NS earned $160 million, or 42 cents a share.

For the full year, net income was $239 million, or 63 cents a share, compared with $734 million, or $1.93 a share, in 1998.

Despite continuing high costs related to the Conrail acquisition, NS executives were optimistic and expressed confidence that the worst of the Conrail congestion is behind the railroad and that revenue would continue to increase through 2000 while excess costs will begin to return to normal.

The magnitude of the Conrail integration problem was seen in the railroad's ratio of operating expense to revenue, which was 90.7 in the fourth quarter and 86.2 for the year, compared with 75.7 and 75.1 for the respective periods of 1998. NS long had boasted the lowest operating ratio among major railroads.

© 2000 Brotherhood of Locomotive Engineers