NS 'profitably grew the business' in 2010, Moorman says (1/26/2011)
1/26/2021Late yesterday afternoon, Norfolk Southern Corp. reported its fourth-quarter financial results. Railway operating revenue increased 14 percent to $2.39 billion, income from railway operations rose 17 percent to $642 million, net income climbed 31 percent to $402 million, diluted earnings per share jumped 33 percent to $1.09 and the operating ratio improved 0.7 points to 73.2 compared with fourth-quarter 2009 results.
Analysts polled by FactSet Research Systems Inc. expected earnings of $1.05 per share and revenue of $2.42 billion. The results weren’t quite as strong as anticipated, “but nonetheless were strong on a year-over-year basis,” said Chairman, President and Chief Executive Officer Wick Moorman during the webcast and teleconference.
“We profitably grew the business, invested in the franchise and generated significant levels of cash,” he said.
Harsh weather during the quarter, especially in December, reduced revenue by $14 million, said Executive Vice President and Chief Marketing Officer Don Seale. Yet, coal revenue rose 18 percent to $685 million and volume increased 12 percent to 395,300 units primarily because of stronger metallurgical coal demand associated with new business and increased steel production, he said.
In addition, intermodal revenue climbed 16 percent to $471 million and volume rose 13 percent to 755,000 units as domestic traffic ballooned 22 percent, international traffic increased 4 percent and premium traffic jumped 14 percent. NS’ intermodal performance prompted FedEx to select the Class I as its preferred eastern rail carrier for a revamped domestic intermodal/truckload service the shipper plans to roll out soon, said Seale.
Meanwhile, merchandise revenue rose 10 percent to $1.2 billion and volume inched up 3 percent to 558,500 units primarily because of record agricultural product volume, especially fertilizers and corn, he said. Overall quarterly volume rose 9 percent to 1.7 million units largely because the railroad registered 2010 highs in the fourth quarter for agriculture, coal and intermodal traffic.
EVP and Chief Information Officer Deborah Butler also reviewed NS’ proposed capital spending budget for 2011. The baseline budget of $1.74 billion is up 19 percent from 2010’s $1.47 billion budget, she said. In addition to baseline spending, the Class I is budgeting $334 million to purchase rail cars that currently are leased and $146 million for positive train control.
The baseline budget includes:
• $763 million for roadway projects — primarily rail, tie and ballast programs, and bridge/culvert replacements — representing 44 percent of the budget;
• $244 million for facilities and terminals;
• $212 million for locomotives, including the acquisition of 50 new units;
• $194 million for “other” projects;
• $155 million for freight cars, including the purchase of 1,500 coal cars;
• $96 million for technology upgrades; and
• $79 million for infrastructure work, such as coal and merchandise network improvements.
— Jeff Stagl
Source: Progressive Railroading Daily News