Western Railroad Discussion > BNSF 2023 Earnings

2023:

Revenues: $23.721 billion (vs. $25.333 billion 2022)
Pre-Tax Earnings: $6.614 billion (vs. $7.708 billion 2022)
Net Earnings: $5.087 billion (vs. $5.946 billion 2022)
Operating Ratio: 68.4% (+2.5% vs. 2022)

Of note: Freight volumes down in all business groups: Consumer Products (8.4%); Industrial Products (0.8%); Agricultural Products (2.9%); Coal (4.0%)

Source: www.berkshirehathaway.com, U.S. SEC Form 10-K, pp. K43-44

Mr Buffett's annual letter to share holders notes that while BNSF spends more on capital expenditures than any other US railroad, "our profit margins have slipped relative to the other railroads. We can and will do better" 

Barron's has a short mention of this in today's magazine.

Lackawanna484 Wrote:
-------------------------------------------------------
> Mr Buffett's annual letter to share holders notes
> that while BNSF spends more on capital
> expenditures than any other US railroad, "our
> profit margins have slipped relative to the other
> railroads. We can and will do better" 
>

In other words, Katie will be requiring longer trains, some more layoffs, and continued use of PSR tactics. Wall Street



Edited 1 time(s). Last edit at 02/24/24 09:54 by AaronJ.

I still say you can't run a railroad properly on an operating ration of less than 70, but that's just a feeling.  I'm not a professional railroader.  I'd love to hear some professional opinions.

Only if she wants to keep her job. Warren likes to brag that he has a hands-off policy concerning management of all the companies he owns. Does anyone really believe that  these management teams don't feel the pressure to produce profits. Katie will do what's necessary.

I'm sure Ms Farmer has her marching orders, but that's a pretty direct command from on high.

For what it's worth, Berkshire Hathaway Energy is in a similar position.

Interlocker Wrote:

> Net Earnings: $5.087 billion (vs. $5.946 billion
> 2022)

See?  They can't afford to clean up that corn on Marias Pass!

Andy

NPRocky Wrote:
-------------------------------------------------------
> I still say you can't run a railroad properly on
> an operating ration of less than 70, but that's
> just a feeling.  I'm not a professional
> railroader.  I'd love to hear some professional
> opinions.

You can, but something gets short shrift if another thing gets properly funded......back and forth...but I guess if you have discipline you can do it....of course the more dollars you make, the more 70 centavos you get to spend on necessities. Therein is the secret....sell more service...make more money. Have great profits and plenty cash for capital improvements. 

Lackawanna484 Wrote:
-------------------------------------------------------
> Mr Buffett's annual letter to share holders notes
> that while BNSF spends more on capital
> expenditures than any other US railroad, "our
> profit margins have slipped relative to the other
> railroads. We can and will do better" 
>
> Barron's has a short mention of this in today's
> magazine.


And that's why they cut the new spokane bridge project half way through... but hey it saves a penny this year... i guess 5 billion in net wasn't enough.

Posted from Android

AaronJ Wrote:
-------------------------------------------------------
> In other words, Katie will be requiring longer
> trains, some more layoffs, and continued use of
> PSR tactics. Wall Street

I said this before, and I'll repeat, even if it's a guess - she's not in charge.

In fact, Buffett may no longer in be charge, either. I hope Matt Rose is smiling, now that he doesn't have to deal with all this. Happy retirement.

goduckies Wrote:
-------------------------------------------------------
> Lackawanna484 Wrote:
> --------------------------------------------------
> -----
> > Mr Buffett's annual letter to share holders
> notes
> > that while BNSF spends more on capital
> > expenditures than any other US railroad, "our
> > profit margins have slipped relative to the
> other
> > railroads. We can and will do better" 
> >
> > Barron's has a short mention of this in today's
> > magazine.
>
>
> And that's why they cut the new spokane bridge
> project half way through... but hey it saves a
> penny this year... i guess 5 billion in net wasn't
> enough.
>
> Posted from Android

The contractors have pretty much removed all the infrastructure that was put in to build the new bridge. Saw today they were loading up the numerous giant steel beams staged there for the bridge to haul away.

I'd like to see how much money BNSF has now dumped into this project, all for nothing! Even if/when they start again, a ton of money has been lost by BNSF (and gained by the contractors) from this project.

What a ridiculous way to run a company!!!

Yeah, that 28-30 month late, 14.5% (compensated) pay raise and back pay for 100,000+ TY&E (and other crafts) that finally went into effect across the system in very late 2022 and early 2023 probably chipped away at those profits a bit too... Breaks my heart.

~ Mr. MRL

Time to close down more locomotive servicing facilities.  Who cares if the toilets are full?  Management isn't affected by that.  Burned out interior light bulbs, bad seats, bad windshield wiper blades, broken refrigerators, heaters that don't work, oil leaks, engines low on water... those TY&E crews got big pay raises.  They can put up with it.

BighornGuy Wrote:
-------------------------------------------------------
> Only if she wants to keep her job. Warren likes to
> brag that he has a hands-off policy concerning
> management of all the companies he owns. Does
> anyone really believe that  these management
> teams don't feel the pressure to produce profits.



Years ago, the management of one of his portfolo companies threw a party to celebrate producing record profits.  He first the lot of them because that was his money to spend, not theirs.

His "hands-off policy" is that he does not get involved in the day-to-day operations.

BobE

BobE Wrote:
-------------------------------------------------------
> BighornGuy Wrote:
> --------------------------------------------------
> -----
> > Only if she wants to keep her job. Warren likes
> to
> > brag that he has a hands-off policy concerning
> > management of all the companies he owns. Does
> > anyone really believe that  these management
> > teams don't feel the pressure to produce
> profits.
>
>
>
> Years ago, the management of one of his portfolo
> companies threw a party to celebrate producing
> record profits.  He first the lot of them because
> that was his money to spend, not theirs.
>
> His "hands-off policy" is that he does not get
> involved in the day-to-day operations.

But he "gets involved" with the people he puts into managing those "day-to-day" operations - so, by defacto, he DEFINITELY gets involved with operations!
 

wyeth Wrote:
-------------------------------------------------------
> But he "gets involved" with the people he puts
> into managing those "day-to-day" operations - so,
> by defacto, he DEFINITELY gets involved with
> operations!

That's true specifically with BNSF. With his other acquisitions, Buffett kept the CEO in place, or didn't fiddle with the subsidiaries' management teams.

It should be obvious by now that Matt Rose was pushed out, with his anti-PSR warning as his parting shot. It's my opinion that Katie Farmer is Ted Weschler's puppet. Ted Weschler was hired by Buffett because he won an eBay auction to lunch with him. Basically, he talked himself into working for Berkshire Hathaway.

Ted Weschler was a hedge fund manager previously, so my guess is that PSR and its flawed philosophies fits his managing philosophy. Metrics, ratios, and other mathematical fantasy land.

Those who've dealt with aging parents and grandparents should know the behavior of 90 year olds. So Buffett not only doesn't manage day-to-day, he can't. I'll even speculate that Buffett is being coerced.

You can certainly blame Buffett to vent, but it won't solve BNSF's PSR problems. Don't know how Berkshire Hathaway as an organization is going to deal with this hedge fund cancer.

cchan006 Wrote:
-------------------------------------------------------
> wyeth Wrote:
> --------------------------------------------------
> -----
> > But he "gets involved" with the people he puts
> > into managing those "day-to-day" operations -
> so,
> > by defacto, he DEFINITELY gets involved with
> > operations!
>
> That's true specifically with BNSF. With his other
> acquisitions, Buffett kept the CEO in place, or
> didn't fiddle with the subsidiaries' management
> teams.
>
> It should be obvious by now that Matt Rose was
> pushed out, with his anti-PSR warning as his
> parting shot. It's my opinion that Katie Farmer is
> Ted Weschler's puppet. Ted Weschler was hired by
> Buffett because he won an eBay auction to lunch
> with him. Basically, he talked himself into
> working for Berkshire Hathaway.
>
> Ted Weschler was a hedge fund manager previously,
> so my guess is that PSR and its flawed
> philosophies fits his managing philosophy.
> Metrics, ratios, and other mathematical fantasy
> land.
>
> Those who've dealt with aging parents and
> grandparents should know the behavior of 90 year
> olds. So Buffett not only doesn't manage
> day-to-day, he can't. I'll even speculate that
> Buffett is being coerced.
>
> You can certainly blame Buffett to vent, but it
> won't solve BNSF's PSR problems. Don't know how
> Berkshire Hathaway as an organization is going to
> deal with this hedge fund cancer.

Ted Weschler -- along with Todd Combs -- is an investment manager at Berkshire Hathaway, and has nothing to do with overseeing Katie Farmer or BNSF. Ms. Farmer's direct report is Greg Abel, vice chairman of non-insurance operations at Berkshire.



Edited 2 time(s). Last edit at 02/29/24 14:19 by Interlocker.

Interlocker Wrote:
-------------------------------------------------------
> Ted Weschler -- along with Todd Combs -- are
> investment managers at Berkshire Hathaway, and
> have nothing to do with overseeing Katie Farmer or
> BNSF.

Let's hope so, but until Greg Abel was publicly annointed as "successor" to Warren Buffett recently, there were uncertainties on who was in charge, especially when Matt Rose was still "there."

>  Ms. Farmer's direct report is Greg Abel,  vice chairman of non-insurance operations at Berkshire.
He's one of the Berkshire managers left alone by Buffett and Munger when he came onboard via MidAmerican Energy,  what is now Berkshire Hathaway Energy. No track record of PSRness from that subsidiary.

NWRail Wrote:
-------------------------------------------------------
> Time to close down more locomotive servicing
> facilities.  Who cares if the toilets are full? 
> Management isn't affected by that.  Burned out
> interior light bulbs, bad seats, bad windshield
> wiper blades, broken refrigerators, heaters that
> don't work, oil leaks, engines low on water...
> those TY&E crews got big pay raises.  They can
> put up with it.


Don't forget the work schedule (as I laugh) insanity for the ones that are left....

Posted from Android

Big layoffs in mechanical announced today including 150 carman jobs systemwide and roughly 25% of the workforce at the Topeka SMT amongst others

Posted from iPhone



Edited 1 time(s). Last edit at 02/27/24 09:57 by Milw_E70.