Norfolk Southern Corp.'s (NSC) third-quarter profit declined a less-than-expected 42 percent as executives of the railroad company expressed optimism that the economy has bottomed and "hopefully" is in recovery, the Wall Street Journal reports.
"We are increasingly confident that we have seen the bottom," Chief Executive Wick Moorman told analysts on a post-earnings conference call, saying the nadir appears to have been reached in the second quarter.
"We're hopeful that an economic recovery may have commenced," he said, although he cautioned that the pace remains uncertain.
Moorman's comments echoed the recent view of CSX Corp. (CSX) that the worst of the recession is over. Still, Union Pacific Corp. (UNP) said only that conditions appear to have stabilized when it reported third-quarter results recently, while Burlington Northern Santa Fe Corp. (BNI) stopped short of making any broad statements regarding the condition of the economy.
All four top U.S. railroads - generally considered good gauges of overall economic activity because of the variety of materials they haul - posted double-digit percentage profit drops for the third quarter on lower revenue and freight volumes.
Norfolk Southern, the last of the four to report, said freight volume slumped 20 percent, with declines in every market category. But the overall figure showed improvement each month and marked progress from the second-quarter's overall 26 percent slide.
Demand trends "continue to suggest (economic) stabilization," Norfolk Southern said.
Company executives reiterated that they have brought back into service some of the railroad's thousands of stored freight cars, citing demand in the steel, coal and automotive markets. Norfolk Southern had about 22,400 cars in storage at the end of the third quarter, from a peak of about 35,000 earlier in the year.
Shares were up 5 cents, or 0.1 percent, at $46.10 in after-hours trading. The stock through the close was up 73 percent from its five-year low of $26.69 in March.
Norfolk Southern posted a third-quarter profit of $303 million, or 81 cents a share, down from $520 million, or $1.37 a share, a year earlier. Revenue slid 29 percent to $2.06 billion amid a 20 percent drop in traffic volume and lower fuel-related revenue.
Analysts surveyed by Thomson Reuters projected earnings of 78 cents on revenue of $2.07 billion.
Revenue from coal shipping decreased 35 percent. For general merchandise, revenue slid 24 percent, as intermodal revenue, or sales from the movement of freight by two or more modes of transportation, tumbled 31 percent.
Railway operating expenses dropped 25 percent.
(This item appeared in the Oct. 28, 2009, Wall Street Journal.)
