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Rail News: Financials

NS sets five financial records, drops operating ratio below 70 for first time


How’s this for quarterly financial results: Norfolk Southern Corp. set five records and posted a sub-70 operating ratio in the third quarter.

Railway operating revenues increased 23 percent to a record $2.9 billion, income from operations jumped 31 percent to an all-time-high $894 million, net income soared 35 percent to a record $520 million, diluted earnings per share rose 41 percent to a record $1.37 and NS’ operating ratio improved 2 points to a best-ever 69.1.

“It was an exceptional quarter for our company,” said NS Chairman, President and Chief Executive Officer Wick Moorman during the Class I’s earnings conference this morning. “It’s a confirmation of the strength of our diversified business portfolio and ability to offset volume declines in the housing-related and automotive sectors.”

Although coal demand was strong and NS handled record coal tonnage, continued weakness in the automotive and housing-related industries contributed to a 1 percent year-over-year traffic volume decline to 1.9 million units. Automotive volume fell 30 percent to 86,639 units vs. third-quarter 2007’s total.
General merchandise revenue increased 13 percent to $1.5 billion despite a 6 percent volume decline, coal revenue jumped 52 percent to $876 million as volume rose 6 percent and intermodal revenue increased 16 percent to $560 million against flat volumes. Revenue per unit jumped 24 percent to $1,527 compared with third-quarter 2007’s total.

Revenue gains primarily can be attributed to rate increases and higher fuel surcharges, said Executive Vice President and Chief Marketing Officer Don Seale.

Meanwhile, railway operating expenses jumped 20 percent to $2 billion compared with third-quarter 2007’s expenses. The main culprit: fuel costs, which soared 64 percent to $474 million as the average price per gallon shot up 65 percent.

Skyrocketing fuel costs have been a “consistent theme in 2008,” said EVP-Finance and Chief Financial Officer James Squires.

Jeff Stagl

Contact Progressive Railroading editorial staff.

More News from 10/22/2008