A 16% dip in coal revenue was the main factor contributing to a 16% drop in net income and a 17% drop in diluted earnings per share for Norfolk Southern Corp.in first-quarter 2015. The operating ratio rose slightly, as well.
Net income for the quarter was $310 million, compared with $368 million during the same period of 2014. Diluted earnings per share were $1.00 compared with $1.17 per diluted share in first-quarter 2014.
Coal revenues were $455 million, 16% lower compared with first-quarter 2014. A weak global export market and fewer shipments of coal utilities combined to decrease volume by 7%, NS said.
“Our first-quarter results reflected weaknesses in our coal markets along with a slowdown in network velocity in part caused by severe winter weather that impacted both our expenses and our volumes,” said NS CEO Wick Moorman. “Looking ahead, while the market uncertainties remain, the resources that we are deploying are driving improved network performance, and we expect our service levels will be significantly higher in the second half.”
Railway operating revenues were $2.6 billion, 5% lower compared with first-quarter 2014, due to lower fuel surcharge revenues in each of NS’ three commodity groups, lower coal volumes and lower average revenue per unit related to the mix of business, NS said. Total volume increased by 2%, or about 40,000 units, reflecting gains in intermodal and merchandise traffic.
General merchandise revenues were $1.5 billion, 2% lower than the same period last year. Volume grew by 3%, led by increases in chemicals and automotive shipments. The five general merchandise commodity groups reported mixed revenue results on a year-over-year basis—chemicals revenues were $432 million, down 2% from last year; agriculture revenues were $374 million, up 4%; metals/construction revenues were $310 million, down 6%; automotive revenues were $219 million, down 4%; and paper/forest revenues were $185 million, down 3%.
Intermodal revenues were $592 million, 1% lower compared with first-quarter 2014. Growth in international and domestic business pushed traffic volume up 5% in the quarter compared with the same period of 2014.
Railway operating expenses declined 3% to $2.0 billion, primarily due to lower fuel costs, compared with the same period of 2014. Income from railway operations was $606 million, 9% lower compared with first-quarter 2014. And the operating ratio, or operating expenses as a percentage of revenue, was 76.4%, compared with 75.2% in the same quarter in 2014.