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RAIL EMPLOYMENT & NOTICES



Rail News Home Financials

2/13/2004



Rail News: Financials

Deutsche Bank transportation conference: Second day, same positive economic sentiments expressed by Class I execs


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Yesterday, day two presentations at Deutsche Bank Securities Inc.'s "Transportation and Machinery Conference" in Naples, Fla., continued to reflect an upbeat attitude toward the U.S. and global economy, according to a meeting summary released by Deutsche Bank analyst John Barnes.

"The railroads focused on pricing improvement, service recovery and resource planning as key themes going into 2004," he said. "Most are seeing continued recovery in the industrial economy and coal appears to be turning the corner."

The coal sector is presenting growth opportunities for Union Pacific Railroad, said Chairman and Chief Executive Officer Dick Davidson. The railroad is moving a blend of high and low sulfur Colorado coal east — business that's growing at a 10 percent rate so far in 2004. The economic recovery continues to drive UP's volume growth in other sectors, such as industrial, despite network pressure from increasing carloads and colder winter weather, said Davidson, who told attendees he will continue to serve UP for the next three years despite recent senior-management changes and creation of an Office of the Chairman.

Cold weather has reduced eastern utility's coal stockpiles, so Norfolk Southern Corp. expects a coal-traffic pick up during the next few months, said Chief Financial Officer Henry Wolf. The railroad is trying to hold compensation and benefits expenses flat compared with 2003, which could improve margins as year-over-year revenue rises. Wolf wouldn't comment on the Duke Energy Corp. and Carolina Power & Light Co. coal rate cases' impact, but margin improvement is a priority, he said.

At Canadian National Railway Co., the Intermodal Excellence (IMX) initiative is working — intermodel profitability no longer is "at the bottom of the barrel," said President and CEO E. Hunter Harrison. IMX is helping CN manage capacity, and reduce congestion and asset detention time. But there still are costs the railroad can target, such as excess consulting spending, said Harrison.

The headlining news at Canadian Pacific Railway is grain — a normal growing grain crop for 2004/2005 would translate into an additional $90 million to $100 million in profits, said CFO Michael Waites. CPR continues to centralize pricing efforts and has added fuel surcharge/escalation clauses to 88 percent of contracts. The Class I now is targeting a 2 percent increase in yield, said Waites.


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