Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, July 26, 1990 TAG: 9007260110
SECTION: BUSINESS PAGE: A-11 EDITION: METRO
SOURCE: GREG EDWARDS BUSINESS WRITER
DATELINE: LENGTH: Medium
NS earned $155.9 million, or 95 cents per share, for the quarter, compared with $173.7 million, or 99 cents per share, during the second quarter of 1989.
However, revenue comparisons for the first quarter and the half were affected by a $13.6 million after-tax gain in April 1989 from the sale of a portion of NS holdings in Trailer Train. If that gain is removed from the picture, the quarterly decline would be 2.6 percent, the Norfolk-based company said.
"Second-quarter coal revenues continued strong, posting a 7.2 percent gain," said NS Chairman Arnold McKinnon.
But revenues from merchandise freight slid by 3.2 percent, with business from chemicals shippers posting the only increase, he said. Merchandise revenues account for about three-fifths of NS railway freight business.
Although operating costs were up, two of the major reasons for the drop in earnings were a poor mix of merchandise freight and lower NS rates this year, said Joel Price, an analyst for the Wall Street firm of Donaldson, Lufkin and Jenrette.
But Don Bourquard, NS' director of market research and economics, questioned whether the railroad's rates were down significantly. "Overall, the yield is up during [the] past six months," he said. "The revenue per ton-mile and revenue per carload, on average, is up."
A variety of factors played into the increase in operating costs, said Deborah Noxon, NS spokeswoman.
While the average number of hours worked by NS employees was down 2.2 percent, average pay was up 3.3 percent, she said. That accounted for an overall 1.5 percent increase in compensation costs.
Fuel consumption was down 1.4 percent but the cost of fuel per gallon was up 1.6 percent, Noxon said. Other small increases were experienced in areas such as depreciation, insurance and equipment rentals.
NS also has taken on added debt related to the repurchase of outstanding shares of stock, Noxon said. As of June 30, NS had issued $351 million in notes under a commercial paper program started in May to pay for the purchase and retirement of common stock.
Price said the performance of all the nation's railroads is following the same track as NS. "Burlington did best for the quarter, but no one's doing great," he said. Investors should look for more of the same in the months ahead, Price said.
For the first six months, NS' net income was $296.1 million, or $1.79 per common share. That's the second-highest on record behind the $307.5 million, or $1.74 per share, earned after taxes in the corresponding period last year.
Despite the drop in net income in the first half, per-share earnings on NS common stock were higher because of the company's continuing stock repurchase program.
by CNB