NS posts lower profit in Q3

Norfolk Southern Corp.'s third-quarter 2015 profit fell 19 percent, a reflection of declining coal volumes, weaker fuel surcharge revenue and NS' restructuring of some operations in response to slower traffic.

NS posted net income of $452 million, or $1.49 per diluted share for the quarter, compared with $559 million, or $1.79 per diluted share, in third-quarter 2014, according to an NS press release.

The results included $37 million in expenses associated with restructuring of the Triple Crown Services subsidiary, as well as the closing of NS' office in Roanoke, Va., which together cut net income by $23 million, or 8 cents per diluted share.

Lower fuel surcharge revenue in three commodity groups and weak coal volume were largely behind the 10 percent decline in operating revenue, which was $2.7 billion for the third quarter.

General merchandise revenue fell 7 percent to $1.6 billion, compared with the same period a year ago. A softening in steel production resulted in a 9 percent decline in metals and construction traffic, which was the main reason for the Class I's 1 percent decline in volume for the quarter.

Four of the five general merchandise commodity groups reported lower revenue results on a year-over-year basis, principally because of lower fuel surcharge revenue: Chemicals revenue declined 8 percent to $451 million; agriculture was down 4 percent to $380 million; metals and construction, down 20 percent to $330 million; automotive, down 3 percent to $246 million; and paper and forest materials, down 3 percent to $203 million.

NS reported an operating ratio of 69.7 percent for the quarter.

"Norfolk Southern's third-quarter results reflect commodities markets that continue to soften, as well as costs associated with restructuring initiatives to strengthen our company going forward," said Chairman, President and Chief Executive Officer James Squires. "These pressures will linger in the fourth quarter, while traffic volume to date continues to lag last year."

Looking ahead to 2016, Squires said the company is "confident that with a reasonably stable economy and our own intense focus on service, returns and growth, we are poised for better results."