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Researched by Industrial Info Resources (Sugar Land, Texas)--Executives with Norfolk Southern Corporation (NYSE:NSC) (Norfolk, Virginia) said the freight railway will trim its planned 2015 capital expenditures (capex) by about 5% as a result of lower earnings. The railway, which operates in 22 states, reported its second-quarter 2015 net income fell 23% to $433 million, in comparison with the same quarter last year, as a drop in fuel surcharge revenue and coal shipments took a bite out of earnings. Railway operating revenues were $2.7 billion, down 11% from second-quarter 2014. Total volumes fell 2%, or about 46,000 units.
A drop in fuel surcharge revenue and coal shipments has been in a common thread in the second-quarter financial reports by North American railways.
Industrial Info is tracking 41 active Norfolk Southern projects worth $1.34 billion, most of which involve the upgrade and rehabilitation of statewide networks. The railway's $60 million expansion of its Rutherford Intermodal Facility in Harrisburg, Pennsylvania, is scheduled for completion in the third quarter of this year. The expansion includes installation of 46,000 feet of track, three pad tracks, 10 support lines and 37 switches to increase annual lift capacity to nearly 350,000 intermodal boxes. Project contractors include Michael Baker International (Moon Township, Pennsylvania) and H&K Group (Skippack, Pennsylvania).
Coal revenues were $633 million in the second quarter, 33% lower from second-quarter 2014, Norfolk Southern reported. Coal revenues were affected by continuing low natural gas prices and falling fuel surcharges. Volume was down 21% for domestic utility coal and 38% for exports.
General merchandise revenues were $1.6 billion, down 5%. However, revenues were flat for chemicals, and down for agriculture, metals/construction, automotive and paper/forest products.
Intermodal revenues were $633 million, 3% down from second-quarter 2014, as a result of lower fuel surcharges. However, intermodal volumes were up 2%.
Chief Financial Officer Marta Stewart said that as a result of the lower earnings, the railway will cut its planned capex for the year by about 5%, or $130 million. About two thirds of this amount will be in road and line work, and the remaining third will be in equipment, she said during the company's earnings conference call.
The railway had earlier planned $2.4 billion in capex for 2015, compared with $2.1 billion in 2014. Capex for the first six months of 2015 totaled $886 million, compared with $809 million for the same period in 2014.
Norfolk Southern Chief Executive Officer James Squires said future growth in the intermodal franchise, consumer spending, housing-related momentum and improved manufacturing activity provide grist for a more optimistic longer-term outlook.
For related information, see April 30, 2015, article - Norfolk Southern Skids on Weak Coal Market in First-Quarter 2015, Sees Improvement in Second Half of Year and July 24, 2015, article - Union Pacific Stung by Lower Coal Shipments, Volume Outlook Uncertain.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
A drop in fuel surcharge revenue and coal shipments has been in a common thread in the second-quarter financial reports by North American railways.
Industrial Info is tracking 41 active Norfolk Southern projects worth $1.34 billion, most of which involve the upgrade and rehabilitation of statewide networks. The railway's $60 million expansion of its Rutherford Intermodal Facility in Harrisburg, Pennsylvania, is scheduled for completion in the third quarter of this year. The expansion includes installation of 46,000 feet of track, three pad tracks, 10 support lines and 37 switches to increase annual lift capacity to nearly 350,000 intermodal boxes. Project contractors include Michael Baker International (Moon Township, Pennsylvania) and H&K Group (Skippack, Pennsylvania).
Coal revenues were $633 million in the second quarter, 33% lower from second-quarter 2014, Norfolk Southern reported. Coal revenues were affected by continuing low natural gas prices and falling fuel surcharges. Volume was down 21% for domestic utility coal and 38% for exports.
General merchandise revenues were $1.6 billion, down 5%. However, revenues were flat for chemicals, and down for agriculture, metals/construction, automotive and paper/forest products.
Intermodal revenues were $633 million, 3% down from second-quarter 2014, as a result of lower fuel surcharges. However, intermodal volumes were up 2%.
Chief Financial Officer Marta Stewart said that as a result of the lower earnings, the railway will cut its planned capex for the year by about 5%, or $130 million. About two thirds of this amount will be in road and line work, and the remaining third will be in equipment, she said during the company's earnings conference call.
The railway had earlier planned $2.4 billion in capex for 2015, compared with $2.1 billion in 2014. Capex for the first six months of 2015 totaled $886 million, compared with $809 million for the same period in 2014.
Norfolk Southern Chief Executive Officer James Squires said future growth in the intermodal franchise, consumer spending, housing-related momentum and improved manufacturing activity provide grist for a more optimistic longer-term outlook.
For related information, see April 30, 2015, article - Norfolk Southern Skids on Weak Coal Market in First-Quarter 2015, Sees Improvement in Second Half of Year and July 24, 2015, article - Union Pacific Stung by Lower Coal Shipments, Volume Outlook Uncertain.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
