Burlington Northern Santa Fe Corp , the No. 2 U.S. railroad, posted stronger-than-expected earnings on Thursday, lifted by improving volumes, and the company said it expected the freight recovery to continue in 2010.

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 17 percent drop in coal volumes and a 21 percent decline in industrial products.

The results included a tax benefit of about 25 cents a share. Stripping that out, the company earned $1.30 a share.

Analysts, on average expected BNSF, which was purchased late last year by Warren Buffett's Berkshire Hathaway Inc for $26.4 billion, to report a net profit of $1.26 a share and a profit before items of $1.22 on sales of $3.62 billion, according to Thomson Reuters I/B/E/S.

(Reporting by James Kelleher; Editing by Steve Orlofsky)