NS 3rd Quarter Income, Traffic Show Decline

Norfolk Southern reported on Wednesday that its third quarter income fell to $452 million compared with $559 million in the same period in 2014.

Also down in the quarter was traffic, which fell by 1.9 million units (3 percent).

However, the railroad said than its operating revenues declined by 10 percent to $2.7 billion, largely due to lower fuel costs.

Income from railway operations was $822 million, 18 percent lower compared with third-quarter 2014.

NS said its operating ratio, or operating expenses as a percentage of revenue, was 69.7 percent, compared with 67.0 percent in the same quarter last year.

NS said that the third-quarter performance reflected the $37 million cost to restructure its Triple Crown Services subsidiary and close its offices in Roanoke, Virginia.

“Norfolk Southern’s third-quarter results reflect commodities markets that continue to soften, as well as costs associated with restructuring initiatives to strengthen our company going forward. These pressures will linger in the fourth quarter, while traffic volume to date continues to lag last year. However, looking ahead to 2016, we are confident that with a reasonably stable economy and our own intense focus on service, returns and growth, we are poised for better results,” said NS Chairman, President and CEO James A. Squires in a statement.

In a news release, NS said that general merchandise revenues were $1.6 billion, 7 percent lower than the same period last year.

Volume declined 1 percent largely due to a 9 percent decline in metals and construction traffic due to softer steel production.

Four of the five general merchandise commodity groups reported lower revenue results on a year-over-year basis, principally the result of lower fuel surcharge revenue:

•  Agriculture: $380 million, up 4 percent
•  Metals/Construction: $330 million, down 20 percent
•  Automotive: $246 million, down 3 percent
•  Paper/Forest: $203 million, down 3 percent
• Chemicals: $451 million, down 8 percent

Intermodal revenues were $621 million, 7 percent lower compared with third-quarter 2014, as lower fuel surcharges and fewer domestic shipments combined to reduce revenues. Total volume declined 1 percent.

Coal revenues were $482 million, 23 percent lower compared with the third quarter of 2014. A weak global export market and lower natural gas prices in the utility market combined to decrease volume by 16 percent.

Tags: Norfolk Southern, NS financial results