(The Associated Press circulated the following article on January 26.)
NORFOLK, Va. — Norfolk Southern Corp. on Wednesday reported record profits for the fourth quarter– beating Wall Street estimates — and the year as it benefited from an improving economy that sent a flood of merchandise, coal and other products onto the nation’s rail system.
“In practically every way, 2004 was a record year for Norfolk Southern,” said David R. Goode, chairman and chief executive officer. “We topped $7 billion in revenue for the first time in our history, and all of our major business sectors set revenue records.”
The Norfolk-based railroad earned $264 million, or 65 cents per share, in the quarter ended Dec. 31, compared to $52 million, or 13 cents per share, in the last quarter of 2003, which was affected by a voluntary buyout of nonunion employees and a charge related to telecommunications assets. Excluding those costs, that quarter’s net income would have been $171 million, or 43 cents a share.
Analysts surveyed by Thomson First Call had estimated earnings of 63 cents per share for the quarter.
The company’s operating revenue rose 16 percent to $1.95 billion in the fourth quarter from $1.68 billion in the year-ago period.
For the year, Norfolk Southern earned $923 million, or $2.31 per share, which included a third-quarter noncash gain of $53 million from the Conrail reorganization. That’s up 73 percent from net income of $535 million, or $1.37 per share, in 2003.
Operating revenue rose 13 percent to $7.31 billion in 2004 from $6.47 billion a year earlier.
The railroad had taken steps over the past few years to add infrastructure, train crews and locomotives to take advantage of the economic upturn, Norfolk Southern president Charles W. Moorman said in a telephone interview from New York following a meeting with analysts.
“We’ve positioned ourselves well,” he said.
Coal, general merchandise and container traffic all set revenue records for the quarter and year. Intermodal traffic had the biggest revenue increases — up 32 percent to $441 million in the fourth quarter and up 24 percent to $1.5 billion for 2004.
The changing dynamics of global trade benefited the railroad, Moorman said, noting coal demand abroad and imports from China and the Pacific Rim have been strong.
The trucking industry’s use of intermodal transport and a revival of the U.S. steel industry also were factors, he said.
Goode, speaking at the meeting with analysts, reiterated the company’s announcement Tuesday that it expected a pretax charge of $30 million to $40 million in the first quarter of this year because of costs associated with the Jan. 6 derailment in South Carolina. The accident left nine dead and more than 250 injured.
“We’re reluctant to say much more,” said Goode, who noted that lawsuits had already been filed against the railroad
Norfolk Southern shares fell 63 cents to close at $34.08 in Wednesday trading on the New York Stock Exchange.