Warren Buffett’s annual letter to Berkshire Hathaway shareholders is out.
The message begins with a quick review of the company’s 2014.
“It was a good year for Berkshire on all major fronts, except one,” they wrote.
It relates to its railroad company Burlington Northern Santa Fe, and how it could’ve served customers better. From the note:
Our bad news from 2014 comes from our group of five as well and is unrelated to earnings. During the year, BNSF disappointed many of its customers. These shippers depend on us, and service failures can badly hurt their businesses.
BNSF is, by far, Berkshire’s most important non-insurance subsidiary and, to improve its performance, we will spend $US6 billion on plant and equipment in 2015. That sum is nearly 50% more than any other railroad has spent in a single year and is a truly extraordinary amount, whether compared to revenues, earnings or depreciation charges.
Though weather, which was particularly severe last year, will always cause railroads a variety of operating problems, our responsibility is to do whatever it takes to restore our service to industry-leading levels. That can’t be done overnight: The extensive work required to increase system capacity sometimes disrupts operations while it is underway. Recently, however, our outsized expenditures are beginning to show results. During the last three months, BNSF’s performance metrics have materially improved from last year’s figures.