Buffett’s BNSF Dividend Is Lowest Since 2010 as Railroad Slumps

  • Decline in freight volumes led to 20% drop in quarterly profit
  • Distribution of $500 million is half year-earlier figure

BNSF is hauling less cash to Omaha these days.

The railroad, owned by Warren Buffett’s Berkshire Hathaway Inc., made a $500 million distribution to its parent in the three months ended June 30, according to regulatory filings. That’s half the total from the same period a year earlier and the lowest amount for a quarter since 2010.

The business has been a major contributor to Berkshire’s profit since Buffett bought it in 2010. BNSF has sent more than $20 billion to its parent since.

Times have gotten tougher. A stronger dollar and sluggish consumer demand have become a drag on U.S. railroads and contributed to a decline in freight volumes. BNSF and its competitors have been shedding workers and parking locomotives to cut costs. But it hasn’t been enough. Profit at BNSF dropped 20 percent to $772 million in the second quarter, according to a regulatory filing Friday.

“Berkshire Hathaway faces ongoing earnings headwinds from its BNSF Railway,” analysts at Barclays Plc wrote in a note to clients this week, saying that the unit still outperformed their expectations. “We anticipate a recovery in earnings growth by 2017.”

The smaller distribution has hardly limited Buffett’s resources for another major acquisition. Omaha, Nebraska-based Berkshire had a record cash balance of $72.7 billion at the end of June.

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