Enter multiple symbols separated by commas

Norfolk Southern Blames "Softer Economy" for Weak Freight Volume

Railroad operator Norfolk Southern reported weaker-than-expected results, blaming lower freight volumes in some segments on a "softer economy." Norfolk Southern shares fell as much as 6%.

The company said that so far in the first quarter slowing economic growth continued to pressure the amount of freight being transported, but Chief Executive Wick Moorman said the company was "confident" volumes would rise in 2007.

The Norfolk, Virginia-based company posted fourth-quarter net income of $385 million, or 95 cents a share, compared with $362 million, or 87 cents a share, a year earlier.

On average, Wall Street analysts had forecast earnings per share of 96 cents, according to Thomson Financial.

Norfolk Southern said quarterly revenue inched up to $2.32 billion compared with $2.26 billion a year earlier. Analysts had expected $2.39 billion on average, according to Thomson Financial.

General merchandise volume was down, compared to the year ago period, as was intermodal volume. Intermodal services use standardized containers that can be hauled by truck, ship or

Coal volume was a bright spot, increasing due to demand from utilities.

Slowing Economic Growth

At an analyst meeting in New York that was also broadcast as a conference call, CEO Moorman said that slowing economic growth had continued to affect the railroad in January.

"(O)verall carloadings are experiencing downward pressure, especially in automotives and metals," he said.

Norfolk Southern also warned at the analyst meeting that coal volume may suffer as a result of this year's relatively warm winter, plus large coal stockpiles at utilities on the U.S. East Coast.

But in a telephone interview with Reuters, Moorman said the company expected the U.S. economy to "perk up" in the second half of the year.

"We are confident that our volumes will be up year over year," he said, adding that volume growth would likely be lower than in 2006.

Moorman also said the company aimed to maintain prices despite the lower volumes.

"I think we will be able to do that providing we are right about the economy," he said.

He added that the company's planned 2007 capital expenditures of $1.34 billion, up from $1.2 billion in 2006, remain unchanged, saying Norfolk Southern is "confident and comfortable" with its investment plan.

Contact U.S. News


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

  • Mark Cuban and Donald Trump

    Donald Trump appears to have Mark Cuban's vote, at least in terms of how the billionaire real estate mogul is conducting his political campaign.

  • Ferrari 488 Spider

    Ferrari's new 488 Spider will have a V-8 turbo engine and a retractable hard-top roof that lowers in just 14 seconds.

  • Members of the New Horizons science team react to seeing the spacecraft's last and sharpest image of Pluto before closest approach later in the day at the Johns Hopkins University Applied Physics Laboratory (APL) in Laurel, Maryland July 14, 2015.More than nine years after its launch, a U.S. spacecraft sailed past Pluto on Tuesday, capping a 3 billion mile (4.88 billion km) journey to the solar system's farthest reaches, NASA said.

    The New Horizons Pluto flyby mission set records for NASA's social media and web metrics——but why do we care so much?

U.S. Video