Number four U.S. railway Norfolk Southern reported net income of $405 million for the second quarter compared with $433 million during the same 2015 period, according to the company’s most recent financial statements.
Norfolk Southern Corp. reported a profit of $405 million in the first quarter of 2016, ended March 31, a 6.9 percent decrease from $433 million in the same 2015 period.
Railway operating revenues fell 10 percent year-over-year to $2.5 billion for the quarter, as overall volumes declined 7 percent from Q2 2015, primarily the result of continued weak coal volumes. Diluted earnings per share stood at $1.36 per share in second quarter, down 4 percent from $1.41 per diluted share in the second quarter last year.
The company’s merchandise revenues dipped 3 percent to $1.6 billion for the quarter, primarily the result of a 3 percent decline in volumes as chemical shipments continued to fall due to prolonged low oil prices. In individual commodity groups, revenues from chemical shipments fell 6 percent to $426 million compared with the previous year, metals/construction revenues dipped 3 percent to $419 million, automotive fell 2 percent to $248 million and paper/forest declined 5 percent to $186 million, while agriculture revenues inched up 1 percent year-over-year to $383 million.
NS intermodal revenues fell 15 percent to $538 million compared with the second quarter of 2015, as volumes slid 5 percent due to the restructuring of the company’s Triple Crown Services subsidiary, the railway said.
Coal revenues continued to plummet, down 25 percent to $339 million for the quarter, as high stockpiles, mild winter weather, and sustained low natural gas prices caused volumes to drop 24 percent year-over-year.
Railway operating expenses, on the other hand, decreased 11 percent to $1.7 billion compared with the same 2015 period, thanks to lower fuel costs and cost cutting initiatives.
“Our second-quarter results reflect our unwavering focus on cost-control, steadfast commitment to customer service, and significant improvements in network performance,” NS Chairman, President and CEO James A. Squires said in a statement. “We are on track to achieve productivity savings of at least $200 million for 2016, and our record first half operating ratio of 69.4 percent gives us confidence we’ll achieve a full-year operating ratio below 70 percent.
“Through the continued execution of our strategic plan, we remain confident in our ability to drive superior shareholder value through excellent customer service that positions us for future revenue growth, combined with network efficiency and asset utilization,” he added.
Norfolk Southern began implementing its strategic plan, designed to cut costs and increase profitability, amid a highly-publicized takeover attempt by Calgary-based Class I railroad Canadian Pacific. NS has said previously the company expects to achieve annual productivity savings from the plan of more than $650 million and an operating ratio below 65 percent by 2020.
CP announced in April it would abandon its attempt to acquire NS after being met with strong opposition from other Class I railroads, shipper, rail unions, parcel carriers UPS and FedEx, and federal lawmakers, to name a few.
NS profits slip 6.9% in Q2 2016
