Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, October 27, 1994 TAG: 9410270072
SECTION: BUSINESS PAGE: B8 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE: LENGTH: Medium
The Norfolk-based transportation company, with 3,000 employees in the Roanoke Valley, set records for third-quarter earnings per share of common stock, income from overall operations, and income from railway operations.
For the year's first nine months, the company set records for measures of net income ($491.7 million), earnings per share ($3.59) and operating ratio - the ratio of expenses to revenues (73.9 percent).
Norfolk Southern's net income for the quarter was $168.3 million, a 19 percent increase over $141.4 million in the same quarter last year, if accounting adjustments that reduced 1993 third-quarter net income to $95.2 million are not taken into account. If the 1993 adjustments are considered, the net increase for the third quarter is 77 percent.
"Norfolk Southern's strong third-quarter results reflected solid gains in both merchandise and coal traffic," NS Chairman David Goode told the company's regular quarterly meeting for securities analysts Wednesday morning at New York's Chemical Bank.
"With the manufacturing sector of the U.S. economy very strong, merchandise revenues for the period rose 7 percent from a year earlier, while coal revenues increased by 8 percent," Goode said. "For the first nine months, merchandise revenues rose by 4 percent, while coal revenues increased by 5 percent."
While railroad revenues from coal shipments, which have been depressed in recent months, have improved, they have room to improve even more as the export market for coal gets better, Goode said.
Norfolk Southern's ratio of operating costs to revenue, a key measure of efficiency, was 73 percent for the quarter and a record 73.9 percent for the nine months. A 4 percent increase in railway operating revenues this year while increases in expenses were held to 1 percent helped produce the record results, Goode said. Another factor was improvement in motor carrier operations. Norfolk Southern's restructured North American Van Lines subsidiary earned a profit of $13.6 million in the third quarter.
Goode noted that NS is on pace to best its previous record yearly operating ratio of 74.1 percent. "It's also significant that our good railroad operating ratio comes at a time when we have clearly improved our customer service," Goode told the analysts. "We continue to believe we can improve both service and productivity with our management team."
Noting that income from investments and property sales has been lower than in recent years, Goode noted that the bottom-line results for the third quarter and the nine months came from operating revenues. "Those results are the product of good business conditions, but also the old-fashioned blocking and tackling that is indicative of the way we do the job at Norfolk Southern," Goode said.
For the remainder of 1994, Good said NS expects the domestic economy to continue to perform well and European economies finally to begin recovering from recession. NS expects the growth in its merchandise and coal traffic to continue in the fourth quarter and next year. "We remain optimistic about business growth and development in 1995 and beyond," he said.
Surprisingly, none of the analysts questioned Goode about rumors of merger talks between Norfolk Southern and Conrail, a northeastern railroad.
by CNB