“CSX Corp. (CSX) and Norfolk Southern Corp. (NSC), the two largest U.S. eastern railroads, topped analysts’ fourth-quarter profit estimates as gains in container cargoes helped counter sliding coal volumes.
Intermodal-container shipments, which can move via highway, ocean or rail, rose 2.8 percent at CSX and 3.2 percent at Norfolk Southern in the period, according to Association of American Railroads data. Coal slumped about 14 percent as utilities abandoned it for cheaper natural gas.
Yesterday’s earnings reports by CSX, Norfolk Southern and Kansas City Southern showed how the industry is adapting to declines in shipments of coal, which remains the biggest single product carried by the major railroads. Union Pacific Corp. (UNP), the biggest U.S. carrier, is set to report results tomorrow.
CSX and Norfolk Southern “put up good numbers in a very difficult environment, slightly better than expected,” said Peter Nesvold, a Jefferies Group Inc. analyst in New York. “These companies do a really good job redeploying assets in other parts of the network when things like coal are soft. It’s going to be difficult for them to grow earnings meaningfully until you start to see a rebound in coal.”
While the three companies all beat estimates, each posted profit declines from a year earlier. Norfolk Southern will face “continuing headwinds” from coal in 2013, Chief Marketing Officer Donald Seale said during a conference call.
