News Content

Norfolk Southern profit up 5.2pc to US$2 billion as revenue drops 3.5pc

THE Norfolk Southern, the No 4 US railway, posted a 5.2 per cent year-on-year profit increase in 2014 to US$2 billion, drawn on revenues of $11.6 billion, down 3.5 per cent.

Fourth quarter profit was down 0.3 per cent to $511 million, drawn on flat year-on-year revenues of $2.9 billion.

The Norfolk, Virginia, company said gains were made in its intermodal, or consumer goods shipments. Its merchandise segment that includes chemical and agricultural goods, also helped offset the fall in coal revenue.

Norfolk Southern said the drop in coal was caused by a weak global export market and fewer shipments of coal to utilities, which resulted in a decrease in freight volumes of six per cent.

Overall, freight volumes on the railway were up four per cent during the quarter.

The company also received a boost from falling oil prices. Its fuel bill for the quarter fell nearly 14 per cent to $347 million from $403 million.

Coal shipments are likely to remain weak throughout 2015, and the current low crude oil prices will limit Norfolk Southern's revenue because many of its fuel surcharge contracts don't assess a charge when oil is selling for less than $64 a barrel.

Norfolk Southern CEO Wick Moorman said service levels continue to improve and the US economy is growing. Plus, the cheap crude oil could provide an additional boost if consumers spend more.

"We remain optimistic," Mr Moorman said. "We do have some headwinds, but we have got a lot of positives in front of us as well."