Profit Drop Surprises Analysts

[NS Newsfeed]

Norfolk Southern Corp., the second-largest railroad in the eastern U.S., fell in early trading after first-quarter profit declined and missed analyst estimates.



Preliminary results of $1 a share represent a drop of about 15 percent from a year earlier, the Norfolk, Virginia-based company said in a statement Monday. Analysts expected about $1.26 a share, according to estimates compiled by Bloomberg. Revenue decreased 5 percent to about $2.6 billion from a year earlier.



"It's a pretty big miss," said Lee Klaskow, an analyst with Bloomberg Intelligence. "There will be an overhang until they begin to improve their execution."



The shares declined 5.6 percent to $99.00 at 7:34 a.m. Norfolk Southern had dropped 4.3 percent this year through the close in New York yesterday while the Standard & Poor's 500 Index gained 1.6 percent.



Coal shipments for most U.S. railroads fell during the first quarter as lower natural gas prices spurred power plants to switch to the fuel from coal. Norfolk Southern's coal carloads fell 10 percent in the quarter, according to statistics from the Association of American Railroads.



Norfolk Southern also has been hit by decreasing oil prices because of a fuel surcharge it levies on customers that is tied to the price of West Texas Intermediate crude, which has fallen more than diesel fuel. When WTI is below $50 a barrel, Norfolk Southern receives no surcharges from customers, Klaskow said.



The company said it will release full results on April 29.