Rail transportation services provider Norfolk Southern Corp. (NSC), Wednesday reported a decline in profit for the fourth quarter, reflecting lower revenues across segments as a result of the decline in traffic volumes. Earnings, as well as revenues came in short of Street estimates.
The Norfolk, Virginia-based company's net income for the fourth quarter declined to $307 million or $0.82 per share from $452 million or $1.21 per share in the previous year.
On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $0.84 per share for the quarter. Analysts' estimates typically exclude special items.
Total railway operating revenues were $2.11 billion, down 16% from $2.50 billion in the comparable quarter last year. Analysts expected revenues of $2.12 billion for the fourth quarter.
In the preceding third quarter, the company's net income declined to $303 million or $0.81 per share, compared to $520 million or $1.37 per share a year ago. Operating revenues declined 29% to $2.1 billion from $2.9 billion in the prior year period.
By segment, coal revenues declined 27% to $580 million from a year ago. Coal traffic volume declined 19% in the quarter from the same period last year.
General merchandise revenues were $1.12 billion, down 9% from last year. General merchandise traffic volume declined 2% in the quarter, compared with the same period of 2008.
Intermodal revenues declined 15% to $407 million from the prior-year quarter. Intermodal traffic volume was down 9% in the quarter, compared to the previous year.
Total operating expenses declined to $1.56 billion from $1.69 billion last year. Compensation and benefits for the quarter rose to $613 million from $609 million in the previous year. Depreciation charges increased to $213 million from $206 million a year ago.
Fourth-quarter operating ratio was 73.9%, compared to 67.5% in the same period last year.
Wick Moorman, CEO of the company, commented, "Our fourth-quarter results demonstrate a continuation of the momentum we have generated since the second quarter of 2009."
"The results reflect a high level of performance throughout Norfolk Southern, and showcase the strength and flexibility of our franchise, our industry-leading safety and service performance, and continuing strong cost discipline," Moorman added.
Amongst peers, Jacksonville, Florida-based CSX Corp. (CSX), reported a 23% increase in profit for the fourth quarter, helped by lower expenses, notwithstanding a 13% decline in revenues. Net earnings increased to $305 million or 0.77 per share for the fourth quarter from $247 million or 0.63 per share in the prior year quarter. Revenue decreased to $2.32 billion from $2.67 billion in the same quarter last year.
For the fiscal year 2009, Norfolk Southern reported net income that declined to $1.03 billion or $2.76 per share from $1.72 billion or $4.52 per share a year ago. Analysts expected earnings of $2.79 per share for the year.
Total revenues for the year declined 25% to $7.97 billion from $10.66 billion last year. Analysts expected revenues of $8.04 billion for the fiscal 2009.
Looking ahead, Moorman said, "We expect to build upon the sequential volume gains we experienced in the third and fourth quarters driven by anticipated improvement in economic conditions combined with project growth."
Norfolk Southern said it plans to invest about $1.4 billion, slightly higher than its 2009 capital spending, in rail network in 2010. The investment would include leveraging technology to improve operational efficiency and service, and support business growth the company anticipates in future years.
NSC last traded on Wednesday at $50.43, up 0.68 or 1.37%, on a volume of 3.00 million shares on the NYSE. In after hours, the stock dropped 0.56 or 1.11%, trading at $49.87. In the past 52-week period, the stock traded in a range from $26.69 to $54.76, on a 3-month average volume of 3.03 million shares.
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