Norfolk Southern Corp.'s (NSC) first-quarter net income dropped
39% amid a drop in traffic volume and a decline in once-reliable
coal revenue.
Following the results, which missed analysts' estimates, shares
of the largely East Coast rail company fell 10% to $33.57 in
after-hours trading. Norfolk's stock has lost over half its value
from September.
Norfolk had maintained profitability during the downturn on the
strength of its coal-shipping revenue, but rival CSX Corp. (CSX)
reported last week its first-quarter earnings dropped 30% as coal
volumes dropped.
The freight sector has been under pressure as the economic
downturn has hurt demand for nearly all goods, and the weakness in
coal shipping in this quarter showed the industry's woes have
spread to its best performer by volume in recent quarters. Norfolk
didn't break out its volume results by segment, but joined CSX in
seeing weakness in coal shipping.
The company reported net income of $177 million, or 47 cents a
share, down from $291 million, or 76 cents a share, a year
earlier.
Revenue dropped 22% to $1.94 billion, amid a 20% drop in traffic
volume and lower fuel-related revenues.
Analysts polled by Thomson Reuters expected per-share earnings
of 55 cents on revenue of $2.04 billion.
Revenue from coal shipping fell 9%. For general merchandise,
revenue decreased 28%, as intermodal revenue, or sales from the
movement of freight by two or more modes of transportation, fell
25%.
Chief Executive Wick Moorman said the company has responded to
the poor economic conditions by aggressively controlling costs, but
said enhancements in service and projects would better position the
company for the economy's eventual recovery.
-By John Kell, Dow Jones Newswires, 201-938-5285, john.kell@dowjones.com