(The following story by Gregory Richards appeared on The Virginian-Pilot website on April 22.)
NORFOLK, Va. — Norfolk Southern Corp. said Tuesday that its first-quarter profit rose 2.1 percent in spite of a slowing economy, yet the results fell short of Wall Street’s expectations.
The Norfolk-based railroad’s income in the January-through-March period was $291 million, up from $285 million in the first quarter of 2007.
Earnings per share rose 7 percent to 76 cents, from 71 cents in the same period last year. The railroad said the settlement of several claims, including a large suit stemming from its deadly January 2005 accident in Graniteville, S.C., reduced earnings by 2 cents per share.
The average estimate of analysts surveyed by Thomson Financial was 78 cents per share.
Norfolk Southern’s operating revenues climbed 11.3 percent to $2.5 billion, despite a 2.3 percent decline in freight volume in the quarter. Coal and agricultural shipments rose as other categories slipped.
Amid slowing consumer spending and the housing market downturn, Norfolk Southern and other major railroads face falling shipments of vehicles and cargo containers, which carry consumer merchandise such as TVs, home furnishings, clothing and food.
Norfolk Southern is the nation’s fourth-largest railroad, with a 21,000-mile network spanning the eastern United States and reaching into Canada. It employs nearly 31,000.
The railroad reported the “highest railway operating revenues in its history, in spite of a less than robust economy,” said Wick Moorman, Norfolk Southern’s chairman and chief executive, in a statement. “We remain optimistic that we will produce continuing positive results in 2008.”
Quarterly operating expenses were $1.9 billion, a year-over-year increase of 11.8 percent. The railroad attributed the growth mainly to fuel costs, which rose by 63 percent to $404 million.
Norfolk Southern released its earnings after the close of the New York Stock Exchange. In regular trading, the company’s shares fell 0.5 percent to close at $61.14 each.
Anthony Hatch, an independent railroad analyst, said the increase in earnings over last year speaks well to Norfolk Southern’s ability to manage costs and set prices in a “tough cyclical environment.”
“The big picture is reassuring,” Hatch said.
CSX Corp., Norfolk Southern’s East Coast rival, also announced higher first-quarter earnings. The Jacksonville, Fla.-based railroad said last week that its income increased 46.3 percent to $351 million despite a 2.2 percent drop in freight. CSX also attributed its growth to agricultural and coal shipments, among other factors.