Norfolk Southern Corp. on Wednesday reported that third-quarter profit fell 19 percent from the same period a year ago.
Net income for the Norfolk-based railroad totaled $452 million, or $1.49 a share, for the quarter that ended Sept. 30, down from $559 million, or $1.79 a share, in the third quarter of 2014.
The results included $37 million of expenses associated with the restructuring of the company’s Triple Crown Services subsidiary and the closing of the railroad’s Roanoke office. Together, they lowered profit by $23 million, or $0.08 per diluted share.
The results beat Wall Street estimates by 8 cents a share. The consensus earnings-per-share estimate of 26 analysts surveyed by Thomson Financial Network was $1.41 a share.
The railroad’s operating revenues for the third quarter fell to $2.7 billion, down 10 percent from the same quarter a year ago. The drop was attributed to reductions in fuel-surcharge revenues in each of Norfolk Southern’s three commodity groups, as well as continued reductions in coal shipments.
Like those charged by other freight transportation companies, the railroad’s fuel surcharge is a fee added to rates based on the price of fuel. As the cost of fuel goes up or down, so does the surcharge.
“Norfolk Southern’s third-quarter results reflect commodities markets that continue to soften, as well as costs associated with restructuring initiatives to strengthen our company going forward,” said James A. Squires, the company’s chairman, president and CEO, in a statement.
“These pressures will linger in the fourth quarter, while traffic volume to date continues to lag last year. However, looking ahead to 2016, we are confident that with a reasonably stable economy and our own intense focus on service, returns and growth, we are poised for better results.”
Coal revenues for the quarter slipped 23 percent from the same quarter a year ago, to $482 million.
Norfolk Southern has faced continued weakness in its coal franchise in recent years.
While coal accounted for about 31 percent of the company’s total railway operating revenues in 2011, it had dropped to about 21 percent in 2014, according to annual reports.
Quarterly revenue in the railroad’s other business segments slipped, too:
— Intermodal – the handling of cargo containers that can move interchangeably by rail, truck or ship — fell 7 percent, to $621 million.
— General merchandise also dropped 7 percent, to $1.6 billion. Volume fell 1 percent, primarily due to a 9 percent drop in metals and construction traffic tied to softer steel production, the company stated.