By Tess Stynes
Norfolk Southern Corp. (NSC) said its first-quarter earnings
fell 16% as the railroad operator was hurt by weak coal
shipments.
The company recently warned that its revenue would be hurt as
coal shipments, one of its key markets, remain under pressure from
a decline in exports and soft demand from electricity producers.
Norfolk Southern also expected revenue would be hit by lower fuel
surcharge revenue and a decline in average revenue per unit owing
to the mix of business.
Lower-than-expected coal volumes have been a challenge for the
rail sector, with Kansas City Southern (KSU), Union Pacific Corp.
(UNP) and CSX Corp. (CSX) all recently reporting that weak coal
shipments weighed on first quarter freight volume.
In the latest quarter, Norfolk Southern's coal revenue dropped
16% to $455 million as coal shipments fell 7%.
Overall, freight volume increased 2% reflecting growth in its
intermodal and general merchandise segments.
The latest quarterly results reflected "continued weakness in
our coal markets along with a slowdown in network velocity in part
caused by severe winter weather which impacted both our expenses
and our volumes," Chief Executive Wick Moorman stated Wednesday in
a news release. Norfolk Southern expects that service levels will
be "significantly higher" in the second half of the year, Mr.
Moorman added.
Overall, Norfolk Southern reported a profit of $310 million, or
$1 a share, down from $368 million, or $1.17 a share, a year
earlier. Revenue decreased 4.5% to $2.57 billion.
The company recently had estimated per-share earnings of about
$1 and revenue of roughly $2.6 billion.
Intermodal revenue, or sales from the movement of freight by two
or more modes of transportation, decreased by nearly 1% to $592
million despite a 5% increase in volume.
General merchandise revenue declined 2.1% to $1.5 billion.
Volume increased 3%, led by growth in chemical and automotive
shipments.
Write to Tess Stynes at tess.stynes@wsj.com
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