January 21, 2010 / 11:26 PM / in 8 years

UPDATE 2-Profit at BNSF, Buffett's new baby, beats Wall St

* Analysts expected $1.26 EPS net and $1.22 EPS ex-items

* Shares unchanged in post-bell trading (Adds background on Buffett’s purchase)

CHICAGO, Jan 21 (Reuters) - Burlington Northern Santa Fe Corp BNI.N, which is being purchased by Warren Buffett’s Berkshire Hathaway Inc (BRKa.N), posted stronger-than-expected quarterly earnings, lifted by improving freight volumes.

Matthew Rose, BNSF’s chairman, president and chief executive, said that freight loadings had stabilized and then begun to improve as 2009 went on and that he expected “this gradual improvement to continue.”

BNSF reported a fourth-quarter net profit of $536 million, or $1.55 a share, down from $615 million, or $1.78 a share, during the comparable period last year.

Freight revenue fell 16 percent to $3.57 billion during the quarter, pulled down by a 17 percent drop in coal volumes, a 20 percent drop in consumer products, and a 21 percent decline in industrial products.

Excluding a tax benefit of about 25 cents a share, the company earned $1.30 a share.

Analysts on average expected BNSF to report a profit before items of $1.22 on revenue of $3.62 billion, according to Thomson Reuters I/B/E/S. The company said revenue totaled $3.68 billion for the quarter.

Earlier this week, Berkshire Hathaway shareholders approved a 50-for-1 stock split that cleared the way for the acquisition of BNSF, Buffett’s biggest acquisition ever and a sign of the billionaire investor’s bullish outlook for the U.S. economy.

BNSF shareholders will vote on the sale on Feb. 11. Closing is expected during the first quarter.

At this week’s meeting of shareholders, Buffett said once again that his purchase of BNSF was a bullish wager on the U.S. economy that should produce good returns well into the future. But he cautioned that though BNSF is a solid long-term investment, he does not expect strong returns in the short term.

“The railroad industry in 2010 is not going to do well,” he said. “I think the return on capital in the business is going to be satisfactory.”

BNSF subsidiary BNSF Railway Co operates across 32,000 miles through 28 U.S. states and two Canadian provinces, moves more grain than any other American railroad and hauls enough low-sulfur coal to generate about 10 percent of the electricity produced in the United States. (Reporting by James Kelleher; Editing by Steve Orlofsky)

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