THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, April 25, 1996 TAG: 9604250447
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: Medium: 72 lines
Led by a rebound in the export coal business - and despite the harsh winter - Norfolk Southern Corp. reported Wednesday a record per-share first-quarter profit.
Coal dumpings at Lamberts Point terminal in Norfolk increased 15 percent in 1996's first three months compared to the year earlier quarter.
``We're beginning to remember how much we love the coal business,'' said David R. Goode, Norfolk Southern's chairman, president and chief executive.
Actual earnings in the quarter ended March 31 dipped slightly to $168.1 million from $170.7 million a year ago. But per-share earnings rose to $1.31 each from $1.29 thanks to the Norfolk-based railroad's stock buyback plan.
The railroad has been aggressively buying its own stock and retiring it to increase shareholder value. It purchased 1.4 million shares in the first quarter alone.
In the first quarter of last year, the railroad company had a one-time $18.8 million gain from the sale of its partnership interest in a Charlotte office tower. Not counting that gain, net income in the most recent quarter was up 11 percent.
Norfolk Southern's stock rose $1 5/8 to $84 5/8 a share in trading on the New York Stock Exchange as its earnings exceeded the consensus estimate of $1.28 a share by railroad analysts.
The railroad's revenues rose 2 percent to $1.16 billion in the first quarter.
``Our operating performance in the quarter was outstanding, even though we estimate extreme winter weather conditions added nearly $9 million in additional costs and, of course, slowed revenues,'' Goode said.
``Our earnings reflect improved coal traffic, continued stringent cost control and, perhaps most importantly, the ability of our dedicated employees to keep our railway operating under bad conditions,'' he added.
Revenues from coal traffic increased 6 percent, while revenues from the shipment of general merchandise were flat.
Besides weather, general merchandise shipments were hit by soft demand in the economy and the General Motors Corp. strike, said L.I. ``Ike'' Prillaman, the railroad's executive vice president of marketing.
March coal shipments were particularly strong as utilities rebuilt their stockpiles.
Railroad executives said the rest of 1996 looks promising, too.
Construction is nearly complete on a conveyor belt that will link the railroad with about 75 million tons of desirable, low-sulfur coal reserves. The coal-fired Virginia Power plant at Clover will swing in to full production later this year, too.
The railroad's automotive business, slowed by the GM strike, should pick up in the second quarter, as well. Two GM plants on its lines that were shut down for retooling are scheduled to start up during the quarter and a BMW plant in Greer, S.C., is at full production.
Goode told an analysts' meeting in New York that the railroad continues to keep an eye on the situation with Florida East Coast Railway, which may be on the block. The small railroad reaches from Jacksonville south to Miami and has been Norfolk Southern's partner on the shipment of autos and shipping containers in Florida.
Norfolk Southern would react with ``some concern'' if rival CSX Corp. tried to buy the Florida East Coast, Goode said.
The railroad would also be interested in buying any lines that federal regulators may force the merging Burlington Northern Santa Fe Corp. and Southern Pacific Rail Corp. to divest for competitive reasons, Goode told Bloomberg Business News. He added that it doesn't look like a forced sale will happen at this point. by CNB