(Reuters circulated the following story by Michael Connor on February 20.)
BOCA RATON, Fla. — Norfolk Southern Corp., the No 4 U.S. railroad, keeps seeing higher cargo volumes as a rising U.S. economy buoys manufacturers and other shippers, the company’s chief executive said on Friday.
“Every indication is that the first quarter is going to be as strong a quarter for us as the fourth quarter was,” Norfolk CEO David Goode said in an interview.
“But, more importantly, for the economy, what that says to me is that you are seeing strength across practically every business group …. The economy is beginning to develop some strength.”
Norfolk Southern, whose lines thread through the eastern United States and Ontario, last month reported a 6 percent rise in fourth-quarter revenues. Quarterly profit before charges increased more than 30 percent.
Goode, during an interview on the sidelines of a meeting of The Business Council organization of leading U.S. chief executives, declined to comment on Wall Street forecasts calling for the company to report first-quarter share profits of 30 cents. A year ago, Norfolk’s quarterly earnings were 22 cents a share.
Other freight haulers have also reported increases in loads, with carriers tied to manufacturers coming out of a sector recession posting some of the best gains.
“Inventories have gotten lean and you need to replenish them and trade volumes are rising,” said economist Joshua Shapiro at Maria Fiorini Ramirez Inc. “It’s consistent with data we’ve seen that the growth is strong.”
Goode said the economy was also giving his company, which is based in Norfolk, Virginia, and hauls everting from coal to computer parts, some pricing power after years of declining prices for rail hauling.
“Overall, we have been able to improve our price levels,” he said, while declining to quantify the increases.
On Friday afternoon, Norfolk Southern shares were up 4 cents at $22.42. Norfolk’s shares have risen about 21 percent in the last six months, or nearly twice the 11 percent gain of the Dow Jones U.S. Railroads Index.