Subscribe to our free, weekly email newsletter!


Norfolk Southern lowers third quarter earnings estimates

By Jeff Berman, Group News Editor
September 20, 2012

Class I railroad carrier Norfolk Southern announced this week that it has lowered third quarter earnings estimates, due mainly to volume declines in certain markets and lower fuel surcharge revenue.

NS said it expects earnings to be in the $1.18-$1.25 range per diluted share, which is down sharply from previous Wall Street estimates of $1.63 per share, according to a Wall Street Journal report.

The company’s third quarter results will be released October 23.

“Decreased coal and merchandise shipments, offset in part by growth in intermodal volumes, are together expected to reduce revenues by approximately $120 million compared with third quarter 2011,” NS officials said in a statement.

And they added that fuel surcharge revenues are expected to be roughly $80 million below the same period last year.  Third quarter 2011 fuel surcharge revenues, said NS, included a favorable lag-effect of $52 million, whereas results for the current quarter are expected to be impacted by an unfavorable lag-effect in the range of $25 to $30 million.

Dahlman Rose analyst Jason Seidl wrote in a research note that with sharp declines in export metallurgical coal prices, the Eastern Class Is (NS and CSX) could see coal declines, as producers could cut production and utility weakness continues.

The WSJ report noted that utility weakness is the result of low prices for natural gas—an alternative fuel—and high coal stockpiles.

In July’s second quarter earnings results, NS reported net income of $524 million, which was down 6 percent than $557 million for the second quarter 2011. And in 2011 the company had its highest recorded operating income, net income, and earnings per share and topped $11 billion in revenue for the first time, while coal, intermodal, and merchandise revenues all were up significantly.

“Looking at our business levels today, we obviously face some challenges in parts of our coal business, due primarily to the extremely mild winter that we experienced, coupled with the current abundance of very cheap natural gas,” said NS CEO Wick Moorman at the company’s annual meeting in May. ”However, we have a strong, balanced franchise, and we are seeing continued growth on other business segments, most noticeably automobiles, metals, and intermodal.”

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

UPS today announced diluted earnings per share of $1.32 for the third quarter 2014, a 13.8% improvement over the prior year period. Operating profit increased 8.3%, resulting from balanced growth across all three segments.

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement (NAFTA) partners Canada and Mexico increased 4.4 percent from August 2013 to August 2014 at $100.6 billion.

As expected, global trade dipped from August to September but still saw annual gains, according to data issued this week by Panjiva, an online search engine with detailed information on global suppliers and manufacturers.

Transportation and logistics merger and acquisition (M&A) activity in the third quarter saw annual gains, which were driven by smaller deals in the trucking logistics, shipping, and passenger air sectors, according to data issued in the Intersections report by PwC this week.

With the holidays rapidly approaching, it appears retailers are not quite done getting inventory set up and on the shelves in time for what is expected to be a fairly active shopping season. That much was evident based on recent data for September volumes issued by the Port of Los Angeles (POLA) and the Port of Long Beach (POLB).

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA