DOW JONES NEWSWIRES
Norfolk Southern Corp.'s (NSC) second-quarter profit dropped 45%
as the railroad company's efforts to cut costs couldn't offset
slumping revenue and volume.
The last major railroad company to report results, Norfolk
joined rivals Burlington Northern Santa Fe Corp. (BNI), CSX Corp.
(CSX) and Union Pacific Corp. (UNP) in posting a double-digit
decline in revenue and lower volumes.
Norfolk reported earnings of $247 million, or 66 cents a share,
down from $453 million, or $1.18 a share, a year earlier.
Revenue decreased 33% to $1.86 billion, amid a 26% drop in
traffic volume and lower fuel-related revenue.
Analysts polled by Thomson Reuters expected earnings of 64 cents
a share on revenue of $2.05 billion.
Revenue from coal shipping declined 34%. For general
merchandise, revenue decreased 33%, as intermodal revenue, or sales
from the movement of freight by two or more modes of
transportation, fell 31%.
Railway operating expenses dropped 29%.
On top of volume problems, U.S. railroads are experiencing
pressure with pricing power because trucking companies have been
discounting to stay in business. Meanwhile, Congress has called for
tighter industry regulation, which Chief Executive Wick Moorman
warned would cost jobs.
Shares were recently unchanged from the Tuesday close at $43.82.
The stock has lost over 40% of its value from its 52-week high of
$75.53 last July.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com