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Norfolk Southern profit down 14 pct on weak coal
Tuesday - 1/22/2013, 6:23pm EST
By JOSH FUNK
AP Business Writer
OMAHA, Neb. (AP) - Weak coal demand is still weighing on Norfolk Southern Corp's profits, and executives at the railroad said Tuesday it's extremely difficult to predict when coal shipments will increase.
The railroad based in Norfolk, Va., said its fourth-quarter profit declined 14 percent to $413 million, or $1.30 per share. That's down from $480 million, or $1.42 per share, a year earlier.
Its quarterly revenue dipped to $2.68 billion from the previous year's $2.8 billion.
Despite the declines, the results still topped Wall Street expectations.
According to FactSet, analysts had expected Norfolk Southern to post earnings of $1.19 per share on $2.67 billion in revenue.
Norfolk Southern CEO Wick Moorman said increases in intermodal shipments _ where a railroad moves containers from ships and trucks _ and those of chemical, automotive and housing-related materials helped offset a 23 percent decline in coal revenue.
"We remain focused on controlling costs and improving productivity while continuing to provide high service levels for our customers," Moorman said.
Norfolk Southern said 590 railroad employees are currently on furlough. The railroad said it plans to reduce costs this year by eliminating about 300 maintenance jobs because crews have become more efficient. The railroad said it plans to reduce its expenses by $100 million this year.
Partly because of the uncertainty about coal, Norfolk Southern plans to reduce its capital spending by 10 percent in 2013 from last year's $2.2 billion, but it will still invest $2 billion in its network.
The weak demand from utilities is a big part of why Norfolk Southern and other railroads are hauling less coal. Moorman said several things must happen before coal demand will increase: Natural gas prices must increase, the economy must improve and normal cold winters and hot summer temperatures must return.
For all of 2012, Norfolk Southern said its net income declined 9 percent to $1.75 billion, or $5.37 per share, on revenue of $11 billion. That's down from $1.9 billion net income, or $5.45 per share, in 2011 on $11.2 billion revenue.
Norfolk Southern operates about 20,000 miles of rail in 22 states, and the railroad serves all major container ports on the East Coast.
The other major freight railroad in the eastern United States, CSX Corp., also reported earnings Tuesday, but it was better able to offset the coal volume declines. CSX said its fourth-quarter profit declined 3 percent to $443 million, or 43 cents per share. That's down from $457 million, or 43 cents per share, in the previous year's fourth quarter.
Union Pacific Corp., the biggest railroad in the U.S., will release its fourth-quarter results on Thursday.
Follow Josh Funk online at www.twitter.com/funkwrite
Norfolk Southern Corp.: www.nscorp.com
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