The railway attributed the increase primarily to strong volume growth in its intermodal and merchandise businesses, offset by a decline in coal.
Norfolk Southern Corporation increased year-over-year net profits 5 percent to $2.0 billion in 2014, thanks to a 3 percent increase in railway operating revenues to $11.62 billion.
In its 2014 annual report, the company attributed the increase primarily to strong volume growth in its intermodal and merchandise businesses. Revenue growth at NS was offset slightly by declines in the railway’s coal business.
NS increased revenues in its intermodal division 7 percent to $2.56 billion in 2014, thanks to an 8 percent growth in volumes to 3.8 million units. Domestic volumes – including truckload and intermodal marketing companies, Triple Crown Services, and Premium business – were up 6 percent, while international volume increased 10 percent. The company expects even greater intermodal revenues in 2015 “due to increased volumes as a result of continued highway conversions and growth associated with new and existing customers.”
General Merchandise revenues at the railway increased 6 percent to $6.68 billion compared with 2013. NS attributed the results in its general merchandise market group – which includes chemicals; metals; agriculture; automotive; and paper, clay and forest divisions – to 5 percent growth in carload volume and a 1 percent improvement in average revenue per unit due to increased fuel surcharge revenue. The railway handled 124 million tons of general merchandise freight for the year in 2014.
Revenues from coal were down 6 percent to $2.38 billion in 2014, reflecting a 5 percent decrease in carload volume at NS. The 141.8 million tons, or 1.3 million carloads, of coal NS handled represented 21 percent of the company’s revenues for the year.
Looking forward to 2015, NS said it “expects the impact of lower oil prices on our fuel surcharge revenue programs to be offset by increased volumes and higher rates.”
NS CEO Wick Moorman said in his message to stockholders, “For the first time ever, we achieved $2 billion in net income, and at the same time set a number of other records, including total revenues, operating income, earnings per share, and our first-ever operating ratio below 70.0.
“These accomplishments were all the more remarkable considering the very significant operating and service challenges that we, along with much of the industry, faced for much of the year,” Moorman added. “2014 began with an extraordinarily severe winter that affected most of our service territory for almost three months.”
Norfolk Southern Railway Company operates approximately 20,000 miles of track in 22 states and the District of Columbia, serving every major container port in the eastern United States and providing connections to other rail carriers across the country. NS operates the most extensive intermodal network in the Eastern U.S. and is a major transporter of coal, automotive and industrial products. The company also leases sections of its track to passenger lines such as Amtrak.
NS increases profits 5% to $2b
