NS Reports Decline in 1st Quarter Net Income

A drop in coal revenue was instrumental in a 16 percent drop in net income for Norfolk Southern during the first quarter of 2015.

The railroad announced this week that its operating ratio – which shows the operating expenses as a percentage of revenue – rose from 75.2 percent to 76.4 percent compared with the same quarter in 2014.

Net income for the quarter was $310 million compared with $368 million during the same period of 2014. Diluted earnings per share were $1 compared with $1.17 per diluted share in first-quarter 2014.

NS said its coal revenues were $455 million, a 16 percent drop from the first quarter of 2014.

The railroad blamed a weak global export market and fewer shipments of coal utilities for the drop in volume.

“Our first-quarter results reflected weaknesses in our coal markets along with a slowdown in network velocity in part caused by severe winter weather that impacted both our expenses and our volumes,” said NS CEO Wick Moorman. “Looking ahead, while the market uncertainties remain, the resources that we are deploying are driving improved network performance, and we expect our service levels will be significantly higher in the second half.”

Railway operating revenues were $2.6 billion, 5 percent lower than the first quarter of 2014. NS attributed that to lower fuel surcharge revenues in each of its three commodity groups, lower coal volumes and lower average revenue per unit related to the mix of business

Total volume increased by 2 percent or about 40,000 units, reflecting gains in intermodal and merchandise traffic.

Railway operating expenses declined 3 percent to $2 billion, primarily due to lower fuel costs, compared with the same period of 2014.

Income from railway operations was $606 million, 9 percent lower than the first quarter of 2014.

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