NEW YORK - Railroad operator Norfolk Southern Corp. said Tuesday its second-quarter earnings sank 45 percent, as widespread cost cuts weren't able to balance the steep downturn in shipping demand.
Norfolk Southern earned $247 million, or 66 cents per share, compared with $453 million, or $1.18 per share, a year earlier.
Revenue sank 33 percent to $1.86 billion from $2.77 billion.
Analysts were expecting a profit of 64 cents per share per share on revenue of $2.05 billion, according to a poll by Thomson Reuters.
The Norfolk, Va.-based company says total traffic on its lines fell by 26 percent in the April to June period. The railroad slashed costs by 29 percent - furloughing workers and stashing train cars and locomotives to adjust to slower business.
Its biggest shipping category, which is the most closely tied to consumer spending, fell off drastically. General merchandise shipment sales sank 33 percent. Coal shipments fell 34 percent, as demand for the commodity in both steel production and electricity generation slid. Norfolk Southern's remaining shipments - the ones transferred between trucks and trains - slipped 31 percent.
The company - the last of the major U.S. railroads to report results - also blamed a decline in the fuel surcharges it collected from customers for its shortfall.
Lower fuel surcharges and dwindling shipments were also the culprit when Norfolk Southern's eastern rival CSX Corp. reported its second-quarter earnings earlier this month. It said its profit fell 20 percent, but the results still topped Wall Street's expectations, and the company suggested that it doesn't expect shipments to fall more.
That's a key signal of a possible, albeit likely far off, economic recovery. Rail shipping demand is considered a key indicator of broader economic health because so many goods consumers use - everything from cars and toys to grain and coal - are transferred on the tracks.
Analysts will be looking for similar comments from Norfolk Southern executives in their Wednesday morning conference call.
Norfolk Southern operates about 21,000 route miles in 22 states and the District of Columbia.
The stock finished down $1.49, or 3.3 percent, to close at $43.63 in the regular session. It fell an additional 4 cents in aftermarket activity.