(The Associated Press circulated the following artilce by Sue Lindsey on July 27.)
NORFOLK, Va. — Norfolk Southern Corp. said Wednesday it nearly doubled its profit in the second quarter, boosted by record railway operating revenue and the effects of tax legislation. Its shares rose nearly 3 percent.
Shares of Norfolk Southern rose $1.03 to $35.56 in afternoon trading on the New York Stock Exchange. That was near the upper end of their 52-week range of $25.33 to $38.99.
The railroad earned $424 million, or $1.04 per share, in the quarter ended June 30, compared to $213 million, or 54 cents per share, in the year-ago quarter. The recent quarter included a $96 million gain related to Ohio phasing out its corporate franchise tax, as well as an extra $24 million for the settlements of two coal rate cases.
Excluding those items, net income still set a record for any quarter before accounting changes, at $304 million, or 75 cents per share. That figure exceeded estimates by analysts surveyed by Thomson Financial, who were looking for the company to post earnings of 65 cents per share in the quarter.
Operating revenue rose 19 percent to $2.15 billion in the quarter from $1.81 billion.
The company said general merchandise revenue rose 12 percent to a record $1.15 billion in the quarter. Coal revenue increased 36 percent to $578 million. Norfolk Southern handled 47.3 million tons of coal, coke and iron ore during the period, setting a second-quarter volume record.
Intermodal revenue rose 18 percent to $428 million in the second quarter.
A greater demand for coal and higher fuel prices increased the demand for traffic, said president Wick Moorman, and the railroad was able to meet it.
“If you don’t offer the service the customers need, you’re not going to get the business,” he said.
Railway operating expenses grew 13 percent to $1.56 billion, due to higher diesel fuel prices and costs associated with increased traffic volume, including expenses related to hiring additional train and engine service employees and maintenance activities.
For the first six months, net income was a record $618 million, or $1.51 per share, up 67 percent from $371 million, or 94 cents a share, during the same period in 2004.
Operating revenue in the first half increased 17 percent to $4.1 billion from $3.5 billion in the year-earlier period.
“Norfolk Southern’s exceptional second-quarter and first-half performance were driven by strong revenue improvement, a better operating ratio and sound rail operations,” said David R. Goode, chairman and chief executive officer.