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New UserLower coal revs hit Norfolk Southern profit; upbeat on U.S. economy
27 Jan 2015
Norfolk Southern Corp, the No. 4 U.S. railroad, expects a solid U.S. economy to boost its business in 2015 but said on Monday it was too early to gauge the overall impact of lower energy prices.
"We feel good about the state of the economy," Chief Executive Officer Wick Moorman told Reuters after the company reported fourth-quarter earning that largely met market expectations. "But what many people are trying to understand is the impact of lower oil prices."
Moorman said cheap oil should boost consumer spending, but the impact on crude oil shipments by rail was unclear. The strengthening U.S. housing market should also mean more lumber and other construction-related shipments.
Norfolk Southern's fourth-quarter profit was hurt by a 15 percent drop in coal revenue. A weak global export market and fewer shipments of coal to utilities led to a 6 percent decrease in freight volumes.
CEO Moorman said coal was unlikely to rebound in the near future, in part because of the strong U.S. dollar.
The Norfolk, Virginia-based company said gains in its intermodal, or consumer goods shipments and its merchandise segment that includes chemical and agricultural goods, largely offset the fall in coal revenue.
Overall, freight volumes on the railroad were up 4 percent during the quarter.
Norfolk Southern reported fourth-quarter net income of $511 million, down from $513 million a year earlier.
Earnings per share were flat at $1.64. Analysts expected $1.63.
Revenue also remained flat at $2.9 billion and came in below analysts' expectations of $2.94 billion.
The company also received a boost from falling oil prices. Its fuel bill for the quarter fell nearly 14 percent to $347 million from $403 million.
In mid-day trading, Norfolk Southern shares were up 1.7 percent at $106.55.
Source: Reuters