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Researched by Industrial Info Resources (Sugar Land, Texas)--Hit with a 29% reduction in fourth-quarter 2015 profits, Norfolk Southern Corporation (NYSE:NSC) (Norfolk, Virginia) unveiled more of its long-term cost cutting plan, which includes reducing the freight railway's employee headcount by 2,000 by 2020. Industrial Info is tracking 21 active Norfolk Southern Projects worth $514.80 million.
Norfolk Southern, which operates primarily in the eastern U.S., said it plans to invest $2.1 billion in capital expenditures for 2015. Speaking during the company's earnings conference call, Chief Executive Officer Jim Squires said, "We cut capital spending by $100 million last year to adapt to the shifting economic environment and we are committed to reducing it even further if necessary."
Fourth-quarter 2015 net income was $361 million, compared with $511 million a year earlier. Operating revenues for the just-ended quarter totaled $2.5 billion, down 12% from a year earlier. Lower coal shipment volumes and the effects of low commodity prices resulted in a 6% drop in overall traffic volume in the fourth quarter. Coal revenues were $433 million, down 20% from a year earlier. The railway also saw substantial revenue drops from shipments of chemicals and metals and construction materials. Intermodal revenues fell 13%.
For all of 2015, the railway reported $1.6 billion in net income, down from $2 billion in 2014. Operating revenue for 2015 fell 10% to $10.5 billion.
Industrial Info is tracking $476 million in Norfolk Southern projects that are under construction, $5 million that are in the engineering phase and one project valued at $34 million, which is in the planning phase, where factors could still increase, decrease or eliminate the expected spending.
Norfolk Southern's Portageville Freight Rail Bridge Replacement in Buffalo, New York has a total investment value of $70 million. The project will replace the existing iron truss rail bridge with a 900-foot steel arch, single-track rail bridge. Completion is expected by the end of 2018.
The railway's long-term plan targets annual productivity savings of more than $650 million by 2020, starting with $130 million in savings this year. The plan calls for cutting employee levels in areas hit by lower coal traffic, and also targets "rightsizing" its coal infrastructure.
It plans to halt or reduce operations in several hump or secondary yards this year, and dispose of, or downgrade, 1,500 miles of secondary lines by 2020, including 1,000 miles this year. Traffic will be rerouted to higher-density lines. The railway also plans to reduce its active locomotive fleet by 300 units this year, and another 100 units by 2020.
Railway executives indicated they expect to see further declines in coal volumes in 2016, giving way to stabilization in 2017.
Canadian Pacific Railway Limited (NYSE:CP) (Calgary, Alberta) has been seeking a merger with Norfolk Southern but so far has been rebuffed by Norfolk Southern's governing board. For related information, see December 9, 2015, article - Canadian Pacific, Norfolk Southern Railway Merger Battle Heats Up. Canadian Pacific and Union Pacific Corporation (NYSE:UNP) (Omaha, Nebraska) also have each reported substantial reductions in fourth-quarter 2015 earnings amid a slowing economy and lower energy prices. For more information ,see January 22, 2016, article - Canadian Pacific, Union Pacific Railways Hammered by Fall in Fourth-Quarter 2015 Earnings, to Cut 2016 Capex.
Canadian National Earnings Rise
Meanwhile, Canadian National Railway Company (CN) (NYSE:CNI) reported Tuesday that it saw an 11% rise in fourth-quarter earnings to C$941 million. Revenues for the quarter, however, dropped 1% to C$3.16 billion and car loadings fell 8%. The railway, which operates in the U.S. Midwest and southern U.S. as well as Canada, said the drop in revenue was due to reduced shipments of energy-related commodities due to a reduction in oil and gas activities as well as lower volumes and semi-finished steel products and short-haul iron ore, decrease coal shipments and lower U.S. grain exports. The railway reported higher revenues from automotive, forest products and intermodal traffic.
Industrial Info is tracking 15 active CN projects worth $721.90 million, including $534 million in the construction phase. Still in the planning phase is $188 million for an intermodal and logistics hub at Milton, Ontario. Construction kickoff is slated for first-quarter 2016, with completion in first-quarter 2019.
For all of 2015, net income increased from the previous year by 12% to C$3.54 billion, while venues increased 4% to C$12.61 billion despite a 2% drop in car loadings. The railway benefited from a positive translation impact of the weaker Canadian dollar on U.S.-dollar-denominated revenues.
CN has a 2016 capital expenditure target of $2.9 billion, compared with $2.7 billion in 2015.
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. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
Norfolk Southern, which operates primarily in the eastern U.S., said it plans to invest $2.1 billion in capital expenditures for 2015. Speaking during the company's earnings conference call, Chief Executive Officer Jim Squires said, "We cut capital spending by $100 million last year to adapt to the shifting economic environment and we are committed to reducing it even further if necessary."
Fourth-quarter 2015 net income was $361 million, compared with $511 million a year earlier. Operating revenues for the just-ended quarter totaled $2.5 billion, down 12% from a year earlier. Lower coal shipment volumes and the effects of low commodity prices resulted in a 6% drop in overall traffic volume in the fourth quarter. Coal revenues were $433 million, down 20% from a year earlier. The railway also saw substantial revenue drops from shipments of chemicals and metals and construction materials. Intermodal revenues fell 13%.
For all of 2015, the railway reported $1.6 billion in net income, down from $2 billion in 2014. Operating revenue for 2015 fell 10% to $10.5 billion.
Industrial Info is tracking $476 million in Norfolk Southern projects that are under construction, $5 million that are in the engineering phase and one project valued at $34 million, which is in the planning phase, where factors could still increase, decrease or eliminate the expected spending.
Norfolk Southern's Portageville Freight Rail Bridge Replacement in Buffalo, New York has a total investment value of $70 million. The project will replace the existing iron truss rail bridge with a 900-foot steel arch, single-track rail bridge. Completion is expected by the end of 2018.
The railway's long-term plan targets annual productivity savings of more than $650 million by 2020, starting with $130 million in savings this year. The plan calls for cutting employee levels in areas hit by lower coal traffic, and also targets "rightsizing" its coal infrastructure.
It plans to halt or reduce operations in several hump or secondary yards this year, and dispose of, or downgrade, 1,500 miles of secondary lines by 2020, including 1,000 miles this year. Traffic will be rerouted to higher-density lines. The railway also plans to reduce its active locomotive fleet by 300 units this year, and another 100 units by 2020.
Railway executives indicated they expect to see further declines in coal volumes in 2016, giving way to stabilization in 2017.
Canadian Pacific Railway Limited (NYSE:CP) (Calgary, Alberta) has been seeking a merger with Norfolk Southern but so far has been rebuffed by Norfolk Southern's governing board. For related information, see December 9, 2015, article - Canadian Pacific, Norfolk Southern Railway Merger Battle Heats Up. Canadian Pacific and Union Pacific Corporation (NYSE:UNP) (Omaha, Nebraska) also have each reported substantial reductions in fourth-quarter 2015 earnings amid a slowing economy and lower energy prices. For more information ,see January 22, 2016, article - Canadian Pacific, Union Pacific Railways Hammered by Fall in Fourth-Quarter 2015 Earnings, to Cut 2016 Capex.
Canadian National Earnings Rise
Meanwhile, Canadian National Railway Company (CN) (NYSE:CNI) reported Tuesday that it saw an 11% rise in fourth-quarter earnings to C$941 million. Revenues for the quarter, however, dropped 1% to C$3.16 billion and car loadings fell 8%. The railway, which operates in the U.S. Midwest and southern U.S. as well as Canada, said the drop in revenue was due to reduced shipments of energy-related commodities due to a reduction in oil and gas activities as well as lower volumes and semi-finished steel products and short-haul iron ore, decrease coal shipments and lower U.S. grain exports. The railway reported higher revenues from automotive, forest products and intermodal traffic.
Industrial Info is tracking 15 active CN projects worth $721.90 million, including $534 million in the construction phase. Still in the planning phase is $188 million for an intermodal and logistics hub at Milton, Ontario. Construction kickoff is slated for first-quarter 2016, with completion in first-quarter 2019.
For all of 2015, net income increased from the previous year by 12% to C$3.54 billion, while venues increased 4% to C$12.61 billion despite a 2% drop in car loadings. The railway benefited from a positive translation impact of the weaker Canadian dollar on U.S.-dollar-denominated revenues.
CN has a 2016 capital expenditure target of $2.9 billion, compared with $2.7 billion in 2015.
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. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
