Norfolk Profit Rises on Pricing, Beats Street Forecast
U.S. railroad Norfolk Southern posted a higher-than-expected net profit on Tuesday as strong prices offset slowing U.S. economic growth, weak freight volumes and high fuel costs.
The Norfolk, Virginia-based company reported fourth-quarter net income of $399 million or $1.02 a share, compared with $385 million or 95 cents a share a year earlier.
Wall Street analysts, on average, had expected earnings per share for the quarter of 91 cents, according to Reuters Estimates.
"While the economic picture remains uncertain, we are optimistic about our prospects for 2008 and beyond," Chief Executive Wick Moorman said in a statement.
Revenue at the railroad rose to $2.45 billion from $2.32 billion, beating analysts' average estimate of $2.34 billion.
This came despite a 3 percent decline in traffic volume from the fourth quarter in 2006.
Over the past few quarters U.S. railroads have continued to post solid profits, thanks to strong pricing power that has withstood the U.S. housing slowdown, weak automotive sales and slowing U.S. economic growth.
Some analysts have questioned how long the railroads will be able to maintain such strong pricing in the face of numerous economic headwinds.
Earlier in the day U.S. railroad CSX Corp also posted better-than-expected results, with pricing also offsetting weak freight volumes.
In after-market trade, Norfolk Southern shares rose 2.2 percent, or $1.02, to $46.09 from Tuesday's official closing price on the New York Stock Exchange of $45.07.