NEW YORK -- Shares of Norfolk Southern Corp. hit a low for the year Wednesday after the railroad reported a 27 percent drop in third-quarter net income and an analyst downgraded the stock.
The Norfolk, Va., company said late Tuesday that the main culprit in its falling profit and revenue last quarter was a steep drop in demand for coal, one of its biggest hauls. Railroads have been dealing with weaker coal demand all year because of low natural gas prices that prompted many utilities to switch from coal. The slower economy in the third quarter, especially overseas, hurt demand for coal exports and metallurgical coal used to make steel.
Norfolk Southern CEO Wick Moorman expects weak coal demand to continue at least into the first half of next year.
Citi analyst Christian Wetherbee cut his rating on Norfolk to "Neutral" from "Buy" on Wednesday, citing the likely impact of weak coal demand next year on earnings. He cut his earnings estimates for the fourth-quarter and full-year 2013.
Norfolk Southern shares fell $4.76, or 7.2 percent, to $61.25 in midday trading, after earlier hitting a 52-week low of $61.22.