NS Net Income Down 5% in 4th Quarter

Norfolk Southern said this week that during the fourth quarter of 2019 its net income fell 5 percent to $666 million, or $2.55 per diluted share, compared with net income of $702 million, or $2.57 per share in the fourth quarter of 2019.

Operating revenue dropped by 7 percent to $2.7 billion as a result of a 9 percent decrease in total volume.

In a news release, NS said operating expenses were $1.7 billion, which was down $90 million compared with the same period of 2018.

Lower compensation and benefits, fuel costs, equipment rents and materials usage were partially offset by lower gains on operating property sales and increased purchased services expense.

Income from railway operations was $1 billion, down $116 million year over year.

NS posted an operating ratio of 64.2 percent for the quarter and 64.7 percent for the full year, both of them records.

For calendar year 2019, NS reported net income of $2.72 billion, or $10.25 per share, compared with $2.67 billion, or $9.51 per share, a year earlier.

On a year to year comparison between 2018 and 2019, NS said its railway operating revenue fell 1 percent to $11.3 billion on a 5 percent decrease in overall volume. Carloads declined in all major commodity categories.

NS reduced operating expenses by 3 percent to $7.3 billion. Income from railway operations rose 1 percent to a record $4 billion.

“Norfolk Southern’s strong financial performance in a year of macroeconomic headwinds is underpinned by the hard work of our team to expeditiously implement productivity initiatives throughout the year,” NS CEO James Squires said in a statement.

During the fourth quarter of 2019 NS saw its coal traffic fall by 21 percent.

Company officials attributed that to low natural gas prices putting pressure on coal for use in electricity generation, and reduced steel production and a weakening market for export coal.

Squires said the annual operating ratio improvement was “particularly impressive against the backdrop of declining volumes.”

NS Chief Operating Officer Mike Wheeler said the carrier set records last year for on-time performance records for merchandise and automotive traffic and posted its best intermodal on-time performance since 2009.

“Our network is running fast and on time,” Wheeler said, citing a 17 percent improvement in average train speed and a record low terminal dwell that was 30 percent below the levels of 2018. He said crew starts were down 15 percent.

During 2019 NS cut its locomotive fleet size by 20 percent and ended 600 mechanical positions.

It expects to eliminated another 135 positions this year.

NS’s merchandise volume dropped 6 percent in the fourth quarter due to a slowdown in the industrial economy. Intermodal volume was off 8 percent.

Chief Marketing Officer Alan Shaw says coal traffic is expected to continue lagging this year but intermodal volumes should resume growth in the second half of the year.

He said uncertainty in the industrial economy means the outlook for merchandise traffic is cloudy.

Squires said NS expects flat revenue this year but should shave 2.35 points off its operating ratio as it continues to cut costs. The carrier is targeting a 60 percent operating ratio by 2021.

Shaw said the fourth quarter of 2019 was the 12 consecutive period in which NS has enjoyed growth in revenue per unit for all three of its business segments.

Tags: , , , , , , , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.


%d bloggers like this: