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Norfolk Southern profit falls 18 percent on lower coal shipments
U.S. railroad Norfolk Southern Corp reported an 18 percent drop in quarterly profit as the company hauled less coal to utilities and for export.
The company said revenue from coal shipments dropped 15 percent in the first quarter ended March 31.
U.S. railroads had been hit by falling demand for coal through last year, but demand for thermal coal is expected to recover in the United States as power producers switch back to coal due to a recent run-up in natural gas prices.
Rivals Union Pacific Corp and Kansas City Southern , which last week reported strong results for the same quarter, indicated that demand for coal was on an upswing.
Norfolk Southern, the largest rail shipper of auto products in North America, said revenue from its automotive business dropped 7 percent.
A severe winter hit auto demand in the first two months of the year and also affected shipments. Union Pacific warned in January that the weather was causing delays of up to 48 hours.
“Following the extreme winter weather across the U.S. rail network, which impacted first-quarter results, we are seeing a rebound in shipments across all of our business,” Norfolk Chief Executive Wick Moorman said.
Norfolk Southern’s net income fell to $368 million, or $1.17 per share, in the first quarter, from $450 million, or $1.41 per share, a year earlier.
Net income in the prior-year quarter included a $60 million gain from a land sale.
Railway operating revenue dropped 1.8 percent to $2.69 billion.
The Norfolk, Virginia-based company’s shares closed at $96.92 on the New York Stock Exchange on Tuesday.
The company’s stock has gained about 28 percent in the past 12 months, beating a 24 percent rise in the S&P 500 railroads index.
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