(The following story by Michael Davis appeared on The Virginian-Pilot website on July 29.)
NORFOLK, Va. — Rail giant Norfolk Southern Corp. hauled in record operating revenues and 55 percent higher year-to-year earnings in the second fiscal quarter, fueled by rising business volumes and better expense controls.
“I don’t think there’s any getting around the fact this was a strong quarter,” David R. Goode, chairman, president and chief executive officer, said Wednesday.
Operating revenues for the three months ended June 30 were $1.8 billion, the highest of any quarter in Norfolk Southern’s history.
That was up 11 percent against the second quarter of 2003.
Officials attributed much of the performance to the nation’s rebounding economy, especially the manufacturing sector, whose inbound raw materials and outbound finished products are carried by Norfolk Southern’s trains.
Norfolk Southern “is a good story that keeps getting better,” said Donald Broughton, a transportation industry analyst with St. Louis-based A.G. Edwards & Sons Inc.
Investors liked the second-quarter performance as well. Norfolk Southern shares closed Wednesday at $26.83, up 93 cents.
For the quarter, the rail company’s earnings were $213 million, or 54 cents per diluted share, compared with $137 million, or 35 cents per share a year earlier.
Year-to-date operating revenues also set a record, hitting $3.5 billion, up 10 percent from $3.2 billion in the first half of 2003.
Net income was $371 million, or 94 cents per share, in the first two quarters.
Second-quarter revenues from shipments of merchandise – which includes metals and construction products, chemicals, autos, and other items – rose 9 percent year-to-year. Coal revenues also rose 9 percent.
Revenues in the intermodal segment, the shipment of truck trailers and shipping containers that can be easily switched among cargo ships, rail cars and trucks, leapt by 21 percent.
Intermodal growth nationwide reached 10.6 percent in the second quarter, Norfolk Southern said, the largest increase since 1994.
While other rail carriers have experienced congestion problems in their networks, Goode said Norfolk Southern’s traffic flow remains healthy.
And the robust traffic gives no indication of slowing.
In July, the first month of Norfolk Southern’s third fiscal quarter, volumes are up about 10 percent, which Goode says is as strong as he has ever seen.
“That’s an indicator the economy is showing some momentum,” he said. “We’re pretty busy right now.”
(Bloomberg News contributed to this report.)