OMAHA, Neb. (AP) — Norfolk Southern Corp. reported its profit was little changed in the fourth quarter from a year ago because the railroad's coal revenue fell 15 percent on weak demand from utilities and export markets.
The Norfolk, Virginia, based company said Monday that total volume increased 4 percent but that wasn't enough to offset the coal weakness.
Coal shipments are likely to remain weak throughout 2015, and the current low crude oil prices will limit Norfolk Southern's revenue because many of its fuel surcharge contracts don't assess a charge when oil is selling for less than $64 a barrel
But Norfolk Southern CEO Wick Moorman still expects the railroad to prosper this year because its service levels continue to improve and the economy is growing. Plus, the cheap crude oil could provide an additional boost to the economy if consumers spend more.
"We remain optimistic," Moorman said. "We do have some headwinds but we have got a lot of positives in front of us as well."
In the fourth quarter, the railroad said it earned $511 million, or $1.64 per share. That was slightly below last year's earnings of $513 million, or $1.64 per share.
Norfolk Southern said its revenue also dipped to $2.87 billion from last year's $2.88 billion.
Citi Investment Research analyst Christian Wetherbee said the quarterly results were helped by a lower tax rate and reduced interest expenses.
Analysts surveyed by FactSet expected the railroad to report earnings per share of $1.63 on revenue of $2.94 billion. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of $1.64 per share on revenue of $2.93 billion.
The railroad said it plans to spend $2.4 billion on capital projects and equipment this year, up from $2.1 billion last year. Norfolk Southern operates about 20,000 miles of track in 22 states and Washington D.C.
Through all of 2014, the railroad reported net income of $2 billion, or $6.39 per share, on $11.6 billion revenue. That's up from the previous year'searnings of $1.9 billion, or $6.04 per share, on $11.2 billion revenue.
Norfolk Southern shares gained $2.23, or 2 percent, to $107.01 in midday trading Monday.
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Norfolk Southern Corp.: www.nscorp.com