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Norfolk Southern’s profit slides as traffic remains slow
(The following story by Robert McCabe appeared on The Virginian-Pilot website on October 28, 2009.)
NORFOLK, Va. — Reflecting the continuing strain of the recession, Norfolk Southern Corp. announced Tuesday that its profit for the July-through-September quarter dropped 42 percent from the same period last year.
The Norfolk-based railroad's income was $303 million, or 81 cents a share, for the quarter ended Sept. 30, down from $520 million, or $1.37 a share in the third quarter of 2008.
The company's earnings beat Wall Street's projections by a few cents per share. The railroad had been expected to report third-quarter earnings of 78 cents a share, according to analysts surveyed by Thomson Reuters.
Third-quarter railway operating revenues were down 29 percent to $2.1 billion, from $2.89 billion in the same quarter a year ago. The company attributed the slide to a drop in traffic volume and lower fuel-related revenues.
"We're pleased with our third-quarter results, which continue to demonstrate the strength of our franchise, our solid operating performance and aggressive cost control," Norfolk Southern CEO Wick Moorman told analysts in a teleconference late Tuesday. "While third-quarter results were clearly impacted by the recession - with a 20 percent reduction in volume - we did reduce operating expenses by 25 percent."
Revenues fell across all of the railroad's business segments:
* General merchandise fell to $1.1 billion from about $1.45 billion in the same quarter last year, a 24 percent drop.
* Coal slid to $571 million from $876 million last year, a decline of 35 percent.
* Intermodal - which involves the shipment of truck trailers and shipping containers - fell to $389 million from $560 million last year, a 31 percent decline.
Norfolk Southern released its earnings after the close of trading on the New York Stock Exchange. In trading Tuesday, its stock price fell 88 cents a share, closing at $46.05.
Early Tuesday afternoon, the company announced its regular quarterly dividend of 34 cents per share on its common stock, payable on Dec. 10, to stockholders of record on Nov. 6.
Since its inception in 1982, Norfolk Southern has paid dividends on its common stock for 109 consecutive quarters. The nation's fourth-largest railroad, Norfolk Southern was the last of the nation's big railroads to report its third-quarter earnings:
* Union Pacific Corp., the largest, announced last week that its third-quarter profit fell 26 percent, to $517 million down from $703 million last year. Revenue dropped 24 percent to $3.67 billion, from $4.85 billion.
* Burlington Northern Santa Fe Corp., the second-largest, reported last week that its earnings fell 30 percent from a year earlier, to $488 million from $695 million. Revenue dropped 27 percent to $3.6 billion, from $4.9 billion.
* CSX Corp., the third-largest, reported two weeks ago an earnings drop of 23 percent from a year ago, to $293 million from $382 million. Revenue also fell 23 percent, to $2.29 billion from $2.96 billion last year.
Norfolk Southern employs about 1,000 people in the Norfolk area, said Susan Terpay, a company spokeswoman.
Thursday, October 29, 2009
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