NORFOLK, Va. - Norfolk Southern executives are optimistic about the economy after delivering a 21 percent rise in second-quarter profit as the railroad hauled more freight.
"We believe that the U.S. economy will continue to recover at a reasonable although not robust level for the balance of this year and next which will also help us to continue our upward momentum," CEO Wick Moorman said.
Norfolk Southern operates the Juniata Locomotive Shop in Altoona and owns the main line tracks that run through Altoona.
The Norfolk, Virginia-based railroad reported net income of $562 million, or $1.79 per share, in the quarter. That's up from $465 million, or $1.46 per share, a year ago. The average per-share estimate of analysts surveyed by FactSet was for earnings of $1.74.
The railroad said revenue climbed 8.6 percent to $3.04 billion from $2.8 billion in the same quarter a year ago, and beat Wall Street forecasts. Analysts expected $3.03 billion, according to FactSet.
The number of containers of imported goods, cars, coal, grain and raw materials railroads haul is considered an indicator of the health of the economy, so Norfolk Southern's 8 percent volume growth is a positive signal.
Edward Jones analyst Logan Purk said some of the volume growth likely came from shipments that couldn't move in the first quarter because of the severe cold that slowed railroads earlier this year. But the results were still better than expected.
"It's a good sign for the health of railroads and the U.S. economy," Purk said.
The fact that coal revenue grew 7 percent to $672 million for Norfolk Southern is particularly encouraging because coal demand has been weak for several years as a number of utilities switched from coal to natural gas and prepared to close old coal plants.
Norfolk Southern shares declined $1.31 to $106.30 in morning trading Wednesday. They have risen 16 percent since the beginning of the year. The stock has climbed 40 percent in the last 12 months.
Norfolk Southern said Tuesday it will raise its quarterly dividend to 57 cents from 54 cents.
Norfolk Southern operates about 20,000 miles of track in 22 states and the District of Columbia.