(Bloomberg News circulated the following story by Angela Greiling Keane and Hugo Miller on October 21.)
NEW YORK — Norfolk Southern Corp., the fourth- largest U.S. railroad, and Canadian National Railway Ltd., that country’s biggest carrier, posted quarterly profit increases as demand for moving coal boosted revenue.
Third-quarter net income rose 35 percent at Norfolk Southern, advancing to $520 million, or $1.37 a share, from $386 million, or 97 cents, a year earlier. Earnings climbed 14 percent at Canadian National to C$552 million ($455 million), or C$1.16 a share, from C$485 million, or 96 cents.
Today’s reports gave Norfolk Southern a fourth straight increase in quarterly profit and allowed Montreal-based Canadian National to avoid a third consecutive decline. Coal is a so- called defensive cargo that doesn’t typically drop off during economic weakness.
“Our diversified traffic base” buoyed Norfolk Southern, Chief Executive Officer Charles “Wick” Moorman said in a statement. Canadian National CEO Hunter Harrison said the carrier “enjoyed good revenue growth across most commodity groups.”
Norfolk Southern advanced 6.7 percent to $57.50 at 5:58 p.m. after regular New York Stock Exchange trading as the per- share profit beat the $1.20 average estimate of 16 analysts compiled by Bloomberg. The shares fell $1.99, or 3.6 percent, to $53.87 before the earnings announcement.
Canadian National slid C$1.51 to C$48.14 at 4:19 p.m. in Toronto Stock Exchange trading, before the results were released. The shares have risen 3.2 percent this year.
Norfolk Southern
Norfolk Southern’s sales rose 23 percent to $2.89 billion.
Volume fell about 1 percent during the third quarter, with declines in shipments for the automotive- and home-related industries, Norfolk Southern said. Coal revenue increased 52 percent on 6 percent more volume.
The railroad, which gets the highest percentage of its revenue from automotive hauling among the large U.S. railroads, saw a 20 percent decline in those shipments through Oct. 11, according to the Association of American Railroads.
CSX Corp., the third-largest U.S. railroad and Norfolk Southern’s competitor in the eastern half of the nation, said last week profit fell 6.1 percent after a year-earlier tax gain. Union Pacific Corp. and Burlington Northern Santa Fe Corp., the biggest U.S. carriers, are scheduled to report earnings Oct. 23.
Canadian National
Canadian National charged more to deliver coal, metals and minerals last quarter, helping increase revenue by 12 percent to C$2.26 billion.
Stronger demand for coal and metals outweighed a drop for lumber and slow growth for autos amid the U.S. housing slump and weaker consumer spending. The stronger U.S. dollar also increased the value in Canadian currency of revenue from the U.S.
Coal revenue rose 41 percent to C$140 million, while metals and minerals revenue jumped 29 percent to C$269 million. That helped overcome a 2 percent drop, to C$383 million, from deliveries of lumber and forest products and an increase of just 3 percent, to C$117 million, for automotive-products shipments.
Excluding a gain of 9 cents a share for deferred income-tax adjustments, profit would have been C$1.07 a share, the company said. The average was C$1.02 for 22 analyst estimates compiled by Bloomberg.