(The following story by Gregory Richards appeared on The Virginian-Pilot website on July 23.)
NORFOLK, Va. Norfolk Southern Corp., the nation's fourth largest railroad, said Tuesday that its second quarter profit rose 15 percent on increased shipments of coal, metals and agricultural products.
The Norfolk-based railroad's income for the April-to-June period was $453 million, or $1.18 per share, compared with $394 million, or 98 cents a share, in the same period in 2007.
Operating revenue totaled $2.8 billion, up 16 percent compared with the second quarter of 2007.
Analysts surveyed by Thomson Financial had predicted earnings of $1.05 per share on revenue of $2.7 billion.
"Looking ahead, our franchise should continue to benefit from a broad and balanced customer base as well as from rail's inherent advantages over other transportation modes - safety and reliability, fuel efficiency and environmental sustainability," Wick Moorman, Norfolk Southern's chairman and chief executive officer, said in a statement.
Continued weakness in housing- and automotive-related industries contributed to a 2 percent decline in Norfolk Southern's second quarter freight shipments compared with the year-ago period. The railroad was still able to grow its bottom line, however, because strong demand allowed it to raise its rates.
Among Norfolk Southern's major cargo categories, coal revenue increased 34 percent in the quarter to $775 million, and general merchandise revenue - encompassing agricultural, paper and other shipments - gained 11 percent to $1.5 billion. Revenue from intermodal shipments, referring to international cargo containers and truck trailers, increased 11 percent to $532 million.
Operating expenses increased almost 17 percent to nearly $2 billion mainly because of higher fuel costs, which rose by $212 million, or 76 percent.
Norfolk Southern released its earnings after the close of the New York Stock Exchange. In trading Tuesday before the announcement, its shares climbed 3 percent to $65.69.
Also Tuesday, Norfolk Southern announced that it will increase its regular quarterly dividend on its common stock by 10 percent, or 3 cents per share, going from 29 to 32 cents a share. The higher dividend is payable on Sept. 10 to stockholders of record on Aug. 1.
Norfolk Southern has increased its dividend 23 percent over the past year.
(Bloomberg News circulated the following story by Angela Greiling Keane on July 22.)
NEW YORK Norfolk Southern Corp., the fourth- largest U.S. railroad, said second-quarter profit rose 15 percent as increased demand for moving coal and agricultural products boosted revenue.
Net income beat analyst estimates, climbing to $453 million, or $1.18 a share, from $394 million, or 98 cents, the Norfolk, Virginia-based company said today in a statement. Sales gained 16 percent to $2.77 billion.
The boost in earnings for a third consecutive quarter showed Norfolk Southern is weathering a slump in demand for moving cargo such as autos by hauling more so-called defensive freight including coal and agricultural products. Shippers move those cargoes even amid economic weakness.
``Our franchise should continue to benefit from a broad and balanced customer base as well as from rail's inherent advantages over other transportation modes -- safety and reliability, fuel efficiency and environmental sustainability,'' Chief Executive Officer Charles ``Wick'' Moorman said in the statement.
Per-share earnings beat the $1.05 average estimate of 12 analysts compiled by Bloomberg.
Revenue increased 34 percent from coal and 10 percent from general merchandise, which includes agricultural products.
Revenue from intermodal shipments, which move by a combination of train, truck and water, rose 11 percent. Norfolk Southern boosted that business with J.B. Hunt Transport Services Inc., the third-largest U.S. trucking company.
`Big Opportunities'
``We believe the growth in domestic intermodal on the East Coast has just begun,'' UBS Financial Services Inc. analyst Rick Paterson said in a July 17 report to investors, saying the growth will benefit both Norfolk Southern and competitor CSX Corp. ``Compared to the West, the East Coast has much more trucker competition, giving CSX and Norfolk Southern big opportunities to steal market share as fuel escalates.''
The sales gains in all three of Norfolk Southern's freight categories were the result of more revenue per cargo unit, as the volume carried fell 2 percent due to ``continued weakness in the housing and automotive-related industries,'' the company said.
Norfolk Southern rose as much as $1.71, or 2.6 percent, to $67.40 after the close of regular New York Stock Exchange trading. The shares gained $2.15, or 3.4 percent, to $65.69 at 4:15 p.m. in NYSE composite trading before the earnings release. They have climbed 30 percent this year.
CSX, the third-largest U.S. railroad and Norfolk Southern's competitor in the eastern half of the nation, said last week profit rose 19 percent to $385 million. Union Pacific Corp. and Burlington Northern Santa Fe Corp., the biggest U.S. railroads, are scheduled to report earnings July 24.
