By Angela Chen
Norfolk Southern Corp. said its fourth-quarter earnings dropped
and the railroad operator posted weaker-than-expected revenue as
growth in its merchandise and intermodal markets was unable to
offset weakness in its key coal segment.
Virginia-based Norfolk Southern primarily transports raw
materials such as coal and industrial products. The railroad has
been hurt by capacity problems and pinch-points that depressed its
service levels last year. It is in the process of getting 150 new
locomotives, and hiring and training 1,453 new employees.
Norfolk Southern has finished or nearly completed three new
infrastructure projects in the Chicago area and upper Midwest that
will add capacity and flexibility to the railroad's Chicago-area
operations. This year, the railroad plans to invest $2.4 billion to
improve operational efficiency, said Chief Executive Wick
Moorman.
For the December quarter, Norfolk Southern reported a profit of
$511 million, down from $513 million a year earlier. Per-share
earnings were unchanged at $1.64.
Revenue dropped less than 1% to $2.87 billion.
Analysts polled by Thomson Reuters expected per-share profit of
$1.63 and revenue of $2.94 billion.
Coal revenue fell 15% to $543 million amid a weak export market
and gas prices that have been low since they began tumbling late
last year. In total, coal volumes were down 6%.
Intermodal revenue, or sales from the movement of freight by two
or more modes of transportation, increased 5% to $649 million on
stronger volume in domestic and international markets. General
merchandise revenue grew 3% to $1.7 billion, led by revenue growth
of 11% for chemicals.
In the past two weeks, rivals CSX Corp. and Kansas City Southern
posted solid results with profits rising on strong demand.
Shares of Norfolk Southern, which edged down less than 1% in
premarket trading, have risen about 17% in the past 12 months
through Friday's close.
Write to Angela Chen at angela.chen@dowjones.com
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