OMAHA, Neb. (AP) — Norfolk Southern said Tuesday that its second-quarter profit slid 11 percent, as the railroad struggled to offset continued weak coal demand and shipping volume grew by only 2 percent.
The Norfolk, Va.-based railroad reported $465 million net income, or $1.46 per share, during the quarter. That's down from $524 million, or $1.60 per share, last year.
Revenue declined 3 percent to $2.8 billion.
Analysts surveyed by FactSet expected earnings of $1.49 per share on revenue of $2.85 billion.
The railroad's stock fell $1.02, or 1.3 percent, to $75.85 in after-hours trading.
Norfolk Southern said coal revenue fell 17 percent to $626 million because of continued weak demand, especially for export coal.
Fuel costs also hurt the railroad's results because of a lag in the when it collects surcharges from customers. Norfolk Southern collected $306 million in fuel surcharges this year, down from $365 last year.
Norfolk Southern CEO Wick Moorman defended the railroad's results.
"The company delivered very solid results for the second quarter, given the combined headwinds of what we've seen in coal and the unfavorable comparison in the fuel surcharge revenue lag," Moorman said.
Edward Jones analyst Logan Purk said he was disappointed in the results which showed Norfolk Southern had trouble increasing shipping rates, especially on coal.
"They're clearly the weakest of the U.S. railroads," Purk said.
Last week, CSX and Union Pacific railroads reported that rate increases helped their results and that coal demand appeared to be stabilizing at a new, weaker level.
All the major freight railroads have seen a significant drop in coal demand over the past couple of years because many utilities switched coal power plants to burning natural gas to take advantage of relatively cheap natural gas prices.
Norfolk Southern also said Tuesday it will increase its quarterly common stock dividend by 2 cents, or 4 percent, to 52 cents per share.
The new dividend will be paid on Sept. 10 to shareholders of record as of Aug. 2, the company said.
Norfolk Southern operates about 20,000 miles of track in 22 states and the District of Columbia.
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Norfolk Southern Corp.: www.nscorp.com