Norfolk Southern earnings drop

Norfolk Southern earnings drop

   Norfolk Southern Corp. said it had fourth quarter net profit of $307 million, 32 percent less than in the same 2008 period.

   Rail operating revenue was $2.1 billion in the fourth quarter, down 16 percent from the same 2008 period. Coal revenue was down 27 percent, intermodal revenue fell 15 percent, and general merchandise revenue slipped 9 percent.

   “Our fourth-quarter results demonstrate a continuation of the momentum we have generated since the second quarter of 2009,” said Wick Moorman, the railroad’s chief executive officer. “We expect to build upon the sequential volume gains we experienced in the third and fourth quarters driven by anticipated improvement in economic conditions combined with project growth.

Moorman

   “The biggest black cloud on the horizon for Norfolk Southern and the industry is obviously the threat of unbalanced legislation,' Moorman said.

   He echoed concerns made earlier this month by the heads of the Union Pacific and CSX about the cost of “positive train control” systems that are aimed at preventing collisions and other accidents. Norfolk Southern said it would spend $40 million on PTC this year and more than $700 million by the end of 2015.

   Moorman said Federal Railway Administration PTC implementation rules “force us to extend the technology far beyond the legislative mandate.

   “We will be forced to forego major capital expenditures for other critical areas of our property over that five-year period. And the result may well be less capacity than is required to handle traffic volumes, a diminished ability to provide good service, and even possibly a less safe working environment than we might have had otherwise,” he said.

   He also said a rail reregulation bill that was approved by the Senate Commerce Committee in December “was a disappointment to say the least,” and “not legislation that Norfolk Southern or the industry can support in its current form.

   “We are certainly not giving up on the process and we will continue to work with the Commerce Committee on changes which will be essential if we are not to oppose the bill,” he said.