Railroad operator Norfolk Southern Corp. (NSC) said Tuesday after the markets closed that its fourth quarter earnings rose 13% from last year, as strong pricing and lower fuel costs offset reduced freight volumes. The company's quarterly earnings per share also came in above analysts' expectations.
The Norfolk, Virginia-based company reported net income for the fourth quarter of $452 million or $1.21 per share, compared to $399 million or $1.02 per share for the year-ago quarter.
On average, 17 analysts polled by First Call / Thomson Financial expected the company to earn $1.18 per share for the fourth quarter.
Railway operating revenues for the fourth quarter increased 2% to $2.50 billion from $2.45 billion in the same quarter last year. Ten analysts had a consensus revenue estimate of $2.60 billion for the fourth quarter.
Revenue per unit improvements in the quarter were somewhat tempered by an 8% decline in traffic volume, the company said and added that operating expenses for the quarter fell 4% year-over-year to $1.7 billion mainly due to lower fuel costs.
"Norfolk Southern delivered strong financial results in the fourth quarter, despite economic conditions that reduced freight volumes," Chief Executive Wick Moorman said in a statement.
Among the three categories, coal revenues for the fourth quarter rose 33% from last year to $798 million, with traffic volume up 5%.
On the other hand, general merchandise revenues, which are heavily tied to trends in consumer spending, fell 10% year-over-year to $1.2 billion, mostly due to a 19% drop in traffic volume.
Intermodal revenues for the quarter declined 3% to $480 million, with traffic volume down 5%.
For the full year 2008, the company reported net income of $1.7 billion or $4.52 per share, compared to $1.5 billion or $3.68 per share for the full year 2007.
Railway operating revenues for the full year 2008 increased to $10.66 billion from $9.43 billion the previous year.
Analysts expected the company to earn $4.50 per share on revenue of $10.65 billion for the full year 2008.
Apart from Norfolk Southern, three other major U.S. railroad operators, Union Pacific Corp (UNP), Burlington Northern Santa Fe Corp (BNI) and CSX Corp (CSX), have reported strong profit over the last few quarter despite the housing downturn, sliding auto and retail sales and the overall slowdown in the U.S. economy.
Last week, Union Pacific reported a 35% rise in its fourth quarter profit, driven by higher productivity and lower fuel costs. Looking ahead to fiscal 2009, the company said it expects to "deliver an even higher level of performance."
Also last week, Burlington Northern Santa Fe reported a 19% rise in fourth quarter profit, beating analysts' estimates.
CSX Corp. said last week its fourth quarter profit fell 32% from last year mostly due to a charge related to the money-losing Greenbrier resort the company owns. But excluding that charge, the company's adjusted earnings per share rose 6% from a year earlier, missing analysts' estimate by a penny.
Norfolk Southern shares, which have traded in a range of $33.45 to $75.53 over the past year, closed Tuesday's regular trading session at $37.65, up $2.35 or 6.66% and gained an additional $1.35 or 3.59% in after hours trading.
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