Norfolk Southern reports sharp drop in net income

The railway reported net income dropped 23 percent in the second quarter of 2015 compared to second quarter 2014.    Norfolk Southern reported net income of $433 million in the second quarter of 2015, down 23 percent compared to the second quarter of 2014. The railway decreased diluted earnings per share from $1.79 to $1.41 per diluted share in the quarter, a 21 percent decline from the previous year.
   The railway’s operating ratio was 70 percent for the quarter, 3.5 percentage points higher than the same period the previous year.
   Railway operating revenues stood at $2.7 billion for the quarter, down 11 percent from the second quarter of 2014.
   General merchandise revenues fell 5 percent to $1.6 billion. The company’s five general merchandise commodity groups reported the following revenues – Chemicals were about even at $454 million, agriculture was down 2 percent to $379 million, metals/construction were down 16 percent to $344 million, automotive was down 6 percent to $254 million, and paper/forest was down 2 percent to $196 million.
   Intermodal revenues also dipped 3 percent to $633 million.
   Coal revenues were down 33 percent to $453 million, with coal volumes down 21 percent.
   NS said all revenue sectors were down as a result of lower fuel surcharges. In addition, the decrease in coal volumes significantly hindered the railway’s operating revenues. Coal in general had a weak season due to low natural gas prices.
   “While we face short-term pressure, particularly as we clear fuel surcharge revenue and coal headwinds, Norfolk Southern is well positioned to continue improving service, which will reduce costs and add value to our customers,” Norfolk Southern CEO James A. Squires said in a statement. “Growth within the intermodal franchise, consumer spending, housing-related momentum and improved manufacturing activity all support an optimistic longer-term outlook.”