Norfolk Southern lowers third quarter earnings estimates

By Jeff Berman, Group News Editor
September 20, 2012 - LM Editorial

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

Congested U.S. port terminals, harbor and over-the-road truck and driver shortages, slower trains and longer rail terminal dwell times due to increased domestic rates have not only disrupted service but also driven intermodal rates and cargo handling costs up sharply.

Southern California shippers are getting a break on container dwell expenses for the next ten days as the Port of Long Beach announced that it had added an extra three days to the time that overseas import containers can remain on the docks without charge.

The long-simmering court battle over whether FedEx Ground’s workers are independent contractors or employees appears headed to the appellate courts—and maybe the U.S. Supreme Court.

Carload volume headed up 4.3 percent to 298,376, and intermodal units, at 273,376 containers and trailers were up 4.8 percent annually.

In light on various service-related freight railroad service issues, the Department of Transportation’s Surface Transportation Board (STB) recently announced it is now requiring Class I railroads to publicly file weekly data reports on service performance. These weekly reports are slated to begin on October 22.

About the Author

Jeff Berman, 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. Contact Jeff Berman.

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