America’s No 4 railroad operator, Norfolk Southern Corp. (NYSE:NSC), on Tuesday reported a better-than-expected second-quarter net profit, as cost-cutting offset a 26% drop in rail freight volumes.
The Norfolk, Virginia-based company, which operates about 21,000 route miles in 22 states and the District of Columbia, said it posted a 2Q net income of $247 million, or $0.66 a share, down from $453 million, or $1.18 a share (-45%), on a year-over-year basis. Sales of general merchandise shipment, the company’s biggest shipping category, fell 33% to $1.9 billion while revenues declined to $1.86 billion from $2.77 billion. Evidently, the co.’s widespread cost cuts weren’t able to balance the steep contraction in shipping demand. The railroad operator’s 2Q results “obviously reflect the impact of the recession,” CEO Wick Moorman said in a statement.
But Norfolk’s results still topped Wall Street’s expectations. Analysts were expecting a profit of $0.64 a share on revenue of $2.05 billion, according to a poll by Thomson Reuters (NYSE:TRI). “[T]he measures we are taking to control expenses while maintaining our industry-leading service levels”, added Moorman,” have enabled us to post solid second-quarter results.”
Railway operating expenses for the quarter were $1.4 billion, the co. said, a decrease of 29% over the same period of 2008.
Norfolk’s market cap is currently at $16B. The company has a profit margin of nearly 16% on $10B trailing twelve revs. $900 M in total cash.
In after-market trade NSC shares, which have oscillated between mid $26 and $75 levels in the past year, were down $0.43 (-0.99%) at $43.20 from their official closing price on the NYSE of $43.63.