the republic logo

Norfolk Southern railroad optimistic after reporting 21 pct jump in 2Q profit on higher volume

bug
Share/Save/Bookmark

NORFOLK, Virginia — Norfolk Southern executives are optimistic about the economy after delivering a 21 percent rise in second-quarter profit as the railroad hauled more freight.

"We believe that the U.S. economy will continue to recover at a reasonable although not robust level for the balance of this year and next which will also help us to continue our upward momentum," CEO Wick Moorman said.

The Norfolk, Virginia-based railroad reported net income of $562 million, or $1.79 per share, in the quarter. That's up from $465 million, or $1.46 per share, a year ago. The average per-share estimate of analysts surveyed by FactSet was for earnings of $1.74.

The railroad said revenue climbed 8.6 percent to $3.04 billion from $2.8 billion in the same quarter a year ago, and beat Wall Street forecasts. Analysts expected $3.03 billion, according to FactSet.

The number of containers of imported goods, cars, coal, grain and raw materials railroads haul is considered an indicator of the health of the economy, so Norfolk Southern's 8 percent volume growth is a positive signal.

PHOTO: In this June 4, 2014 photo, a Norfolk Southern locomotive moves along the tracks in Norfolk, Va. Norfolk Southern Corp. on Wednesday, July 23, 2014 reported profit that climbed by 21 percent in its second quarter, and topped analysts' expectations. (AP Photo/Steve Helber)
In this June 4, 2014 photo, a Norfolk Southern locomotive moves along the tracks in Norfolk, Va. Norfolk Southern Corp. on Wednesday, July 23, 2014 reported profit that climbed by 21 percent in its second quarter, and topped analysts' expectations. (AP Photo/Steve Helber)

Edward Jones analyst Logan Purk said some of the volume growth likely came from shipments that couldn't move in the first quarter because of the severe cold that slowed railroads earlier this year. But the results were still better than expected.

"It's a good sign for the health of railroads and the U.S. economy," Purk said.

The fact that coal revenue grew 7 percent to $672 million for Norfolk Southern is particularly encouraging because coal demand has been weak for several years as a number of utilities switched from coal to natural gas and prepared to close old coal plants.

Norfolk Southern shares declined $1.31 to $106.30 in morning trading Wednesday. They have risen 16 percent since the beginning of the year. The stock has climbed 40 percent in the last 12 months.

Norfolk Southern said Tuesday it will raise its quarterly dividend to 57 cents from 54 cents.

Norfolk Southern operates about 20,000 miles of track in 22 states and the District of Columbia.

Omaha, Nebraska-based Union Pacific releases its earnings report Thursday.

Think your friends should see this? Share it with them!

All comments are moderated before posting. Your email address must be verified with Disqus in order for your comment to appear.
View our commenting guidelines and FAQ's here.

Story copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Feedback, Corrections and Other Requests: AP welcomes feedback and comments from readers. Send an email to info@ap.org and it will be forwarded to the appropriate editor or reporter.


We also have more stories about:
(click the phrases to see a list)

Category:

Follow The Republic:

All content copyright ©2014 The Republic, a division of Home News Enterprises unless otherwise noted.
All rights reserved. Privacy policy.