Norfolk Southern Q3 Profit Declines

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Tuesday, Norfolk Southern Corp. (NSC) a North American rail transportation company, reported a decline in net income for the third quarter ended September 30, impacted by a decline in railway operating revenues on a 20% reduction in traffic volume and lower fuel related revenues.

Norfolk Southern, which is the fourth largest railroad company in the U.S., said net income for the quarter declined to $303 million or $0.81 per share, compared with $520 million or $1.37 per share, for the third quarter of 2008. On average, twenty one analysts polled by Thomson Reuters expected the company to earn $0.78 per share for the quarter. Analysts' estimates typically exclude special items.

The Norfolk, Virginia based company said its third quarter railway operating revenues declined 29% to $2.1 billion from $2.9 billion in the prior year period. Thirteen Wall Street analysts estimated revenues of $2.07 billion for the quarter. Total operating revenues were impacted primarily due to a 20% reduction in traffic volume and lower fuel-related revenues.

Segment-wise, General merchandise revenues declined 24% to $1.1 billion from $1.46 billion in the year-ago period. Coal revenues declined 35% to $571 million from $876 million in the year-ago period and Intermodal revenues decreased 31% to $389 million from $560 million in the prior year period.

Total railway operating expenses declined 25% to $1.50 billion from $2.0 billion during the comparable period a year ago, as compensation and benefits declined to $598 million from $708 million, purchased services and rents declined to $352 million from $419 million, expenses on fuel declined to $192 million from $474 million and materials and other expenses declined to $149 million from $198 million in the prior year period. Depreciation expenses for the quarter increased to $210 million from $201 million in the year earlier period.

The company's railway operating ratio was 72.8%, compared with 69.1% during the third-quarter 2008.

Wick Moorman, chief executive officer of Norfolk Southern said, "By controlling costs and maintaining service levels, we are managing through this economic downturn and will emerge an even stronger company."

For the nine months ended September 30, the company's net income declined to $727 million from $1.3 billion during the comparable period a year-ago. Year-to-date total railway operating revenues declined to $5.86 billion from $8.16 billion during the prior year period.

On September 28, the company unveiled the NS 999, which is an entirely electic locomotive and a latest in alternative energy locomotive technology. When fully charged, NS 999 is able to operate three shifts before recharging is required. Congressman Bill Shuster secured $1.3 million in federal funding for the NS 999 project.

Additionally, on October 16, the company said that it has extended the expiration date of its offer to exchange up to $500 million aggregate principal amount of its 5.75% senior notes due 2016 for an equal amount of its privately placed 5.75% senior notes due 2016. The exchange offer, which was scheduled to expire on October 16 will now expire on November 4, unless further extended, to allow holders of the outstanding original notes additional time to tender in the exchange offer.

NSC closed Tuesday's regular trade at $46.05, down $0.88 or 1.88%, on the New York Stock Exchange.

Norfolk Southern Corp. a North American transportation provider, reported a decline in net income for the third quarter ended September 30. Profits were hit by a decline in railway operating revenues, which was the result of a 20% reduction in traffic volume and lower fuel related revenues. (Market News Provided by RTTNews)