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Rail News Home Financials

10/20/2004



Rail News: Financials

Financials: Any way you slice it, an 'extremely strong' third quarter for NS


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A year ago, Norfolk Southern Corp. senior officials said the Class I had laid a strong foundation to increase revenue, cut costs and improve service by implementing the Thoroughbred Operating Plan in 2002. Officials planned to continue adding building blocks to that foundation to work toward a "7 + 7" goal of earning more than $7 billion in yearly revenue and recording an annual operating ratio in the 70s. Consider the reconstruction well under way.

Today, NS reported record third-quarter revenue of $1.9 billion, a 16 percent increase compared with third-quarter 2003. The Class I also increased quarterly income from railway operations 51 percent to $469 million and improved its quarterly operating ratio 5.8 points to 74.7.

Quarterly intermodal revenue rose 28 percent to a record $404 million, while coal and general merchandise revenue increased 20 percent to $447 million and 10 percent to $1 billion, respectively.

"By any measure, this was an extremely strong quarter for our company," said NS Chairman and Chief Executive Officer David Goode in a prepared statement. "We demonstrated uniform strength in the face of a robust peak traffic season, and our people and network performed well."

Quarterly net income of $288 million — which includes a non-cash gain of $53 million from a Conrail corporate reorganization — rose 110 percent compared with third-quarter 2003's $137 million. However, quarterly operating expenses increased 8 percent to $1.4 billion because of higher compensation and benefits, materials and services, and fuel costs tied to rising business volume.

During the year's first nine months, NS increased operating revenue 12 percent to a record $5.4 billion compared with similar 2003 data. Net income of $659 million rose about 85 percent and NS' operating ratio improved 5.6 points to 76.9. The railroad contained operating expenses to $4.1 billion — a 4 percent increase compared with last year — despite various cost hikes and rising demand.