Norfolk Southern railroad's profit up 19%

NORFOLK

Norfolk Southern Corp. announced Tuesday that its fourth-quarter profit rose 19 percent from the same period a year ago.

Net income for the Norfolk-based railroad totaled a record $480 million, or $1.42 a share for the quarter that ended Dec. 31, up from $402 million, or $1.09 a share, in the fourth quarter of 2010. The railroad also hit a record in 2011 with profit for the year reaching $1.9 billion, up 28 percent from 2010. Earnings per share for the year were $5.45.

Quarterly earnings beat Wall Street projections by 2 cents a share. The consensus earnings-per-share estimate of 26 analysts surveyed by Thomson Financial Network was $1.40.

The railroad's operating revenues for the fourth quarter climbed 17 percent from the same period a year ago, to $2.8 billion. For the year, operating revenues grew to $11.2 billion, up 17 percent.

Norfolk Southern executives attributed the growth to higher prices for its service and increased rail volume, resulting from overall economic improvement and a shift to trains from trucks as highway capacity has tightened.

"Our fourth quarter capped an outstanding year for Norfolk Southern," Wick Moorman, the company's CEO, said Tuesday during a discussion of results with analysts. "We share in what seems to be the consensus view that the economy will continue to grow."

The company released its earnings after the close of trading on the New York Stock Exchange. Its stock price fell 47 cents Tuesday, closing at $75.48.

Quarterly revenue increased by double-digit margins across all of the railroad's business segments:

General merchandise revenues reached $1.4 billion, a 13 percent increase from the same period a year ago. Merchandise volume increased 1 percent.

Intermodal business - the handling of cargo containers that can move interchangeably by rail, truck or ship - rose 18 percent in the quarter, to $554 million. Intermodal traffic increased 11 percent for the quarter and 10 percent for the year.

Coal revenues jumped 24 percent, to $850 million. For the year, coal revenues increased 27 percent to $3.5 billion over 2010. Volume at the railroad's Lamberts Point coal-export terminal in Norfolk climbed 37 percent.

Coal exports and shipments to power plants increased, despite mild weather, said Don Seale, Norfolk Southern's chief marketing officer. The railroad also moved more metallurgical coal to meet growing demand for steel production.

Also on Tuesday, Norfolk Southern announced that its board of directors approved an increase of 9.3 percent, or 4 cents per share, in its regular quarterly dividend. The dividend rose to 47 cents per share, payable on March 10 to shareholders of record on Feb. 3.

Norfolk Southern operates roughly 20,000 route miles in 22 states and the District of Columbia. As of Dec. 1, the company had 30,530 employees, 1,138 of them in Hampton Roads.

Pilot writer Robert McCabe contributed to this report.

Carolyn Shapiro, 757-446-2270, carolyn.shapiro@pilotonline.com