NORFOLK, Va. - Norfolk Southern Corp. on Tuesday reported that its profit for the April-to-June quarter dropped 45 percent from the same quarter a year ago, the Virginian Pilot reports.
The Norfolk-based railroad's net income for the quarter was $247 million, or 66 cents a share, down from $453 million, or $1.18 a share in the second quarter of 2008. The earnings beat Wall Street's expectations. Thomson Reuters said analysts predicted a profit of 64 cents a share on revenue of $2.05 billion.
"The whispers said disaster, that this would be the one rail to disappoint the Street," said Anthony Hatch, a New York-based independent railroad analyst.
Instead, he said, Norfolk Southern's results beat the consensus. "Everyone forgets how solid this network and management team are," Hatch said.
Norfolk Southern's operating revenues for the quarter were $1.86 billion, down 33 percent from $2.76 billion in the same quarter of 2008. The railroad attributed the decline to a 26 percent reduction in traffic volume and lower fuel-related revenues.
Its second-quarter revenue fell across all its segments:
- General merchandise fell 33 percent to $978 million, from $1.46 billion a year earlier.
- Coal dropped 34 percent to $511 million, from $775 million last year.
- Intermodal - the shipment of truck trailers and containers - was down 31 percent to $368 million, from $532 million a year ago.
"Second-quarter results obviously reflect the impact of the recession," said Norfolk Southern CEO Wick Moorman, in a news release. "However, the measures we are taking to control expenses while maintaining our industry-leading service levels have enabled us to post solid second-quarter results, while at the same time we continue to invest in projects that position us for the eventual economic recovery."
Norfolk Southern released its earnings after the close of the New York Stock Exchange. In trading Tuesday, its shares fell $1.49 each to close at $43.63.
Earlier Tuesday, the railroad announced its regular quarterly dividend of 34 cents per share, payable on Sept. 10, to stockholders of record on Aug. 7.
Norfolk Southern was the last of the big four railroads to release second-quarter earnings. Among the other three:
- Union Pacific reported a profit drop of 12 percent, to $468 million from $531 million a year ago. Its results include $72 million gain related to a June land sale.
- Burlington Northern Santa Fe's profit grew 15 percent, to $404 million from $350 million in the same quarter of 2008. Its results included a $175 million charge related to an "environmental matter" in Montana.
- CSX Corp. reported income of $308 million, down from $385 million last year.
All three reported large revenue declines, ranging from 25 percent for CSX to 28 percent for Union Pacific.
(This item appeared in the Virginian Pilot July 29, 2009.)
Norfolk Southern 2nd-qtr earnings plummet as cost cuts not enough to counter shipping downturn
(The Associated Press circulated the following story by Samantha Bomkamp on July 28, 2009.)
NEW YORK Railroad operator Norfolk Southern Corp. said Tuesday its second-quarter earnings sank 45 percent, as widespread cost cuts weren't able to balance the steep downturn in shipping demand.
Norfolk Southern earned $247 million, or 66 cents per share, compared with $453 million, or $1.18 per share, a year earlier.
Revenue sank 33 percent to $1.86 billion from $2.77 billion.
Analysts were expecting a profit of 64 cents per share per share on revenue of $2.05 billion, according to a poll by Thomson Reuters.
The Norfolk, Va.-based company says total traffic on its lines fell by 26 percent in the April to June period. The railroad slashed costs by 29 percent furloughing workers and stashing train cars and locomotives to adjust to slower business.
Its biggest shipping category, which is the most closely tied to consumer spending, fell off drastically. General merchandise shipment sales sank 33 percent. Coal shipments fell 34 percent, as demand for the commodity in both steel production and electricity generation slid. Norfolk Southern's remaining shipments the ones transferred between trucks and trains slipped 31 percent.
The company the last of the major U.S. railroads to report results also blamed a decline in the fuel surcharges it collected from customers for its shortfall.
Lower fuel surcharges and dwindling shipments were also the culprit when Norfolk Southern's eastern rival CSX Corp. reported its second-quarter earnings earlier this month. It said its profit fell 20 percent, but the results still topped Wall Street's expectations, and the company suggested that it doesn't expect shipments to fall more.
That's a key signal of a possible, albeit likely far off, economic recovery. Rail shipping demand is considered a key indicator of broader economic health because so many goods consumers use everything from cars and toys to grain and coal are transferred on the tracks.
Analysts will be looking for similar comments from Norfolk Southern executives in their Wednesday morning conference call.
Norfolk Southern operates about 21,000 route miles in 22 states and the District of Columbia.
The stock finished down $1.49, or 3.3 percent, to close at $43.63 in the regular session. It fell an additional 4 cents in aftermarket activity.
