Norfolk Southern thinks worst of recession is over
NEW YORK — The last of the major U.S. railroads to report second-quarter earnings agrees with the others: It appears the worst of the recession is over.
But Norfolk Southern Corp. warned Wednesday of an “unstable and uncertain” finish to 2009.
Executive Vice President Donald W. Seale said in a conference call with analysts “it does appear we have experienced a bottom in the economy.”
He echoed similar comments from rival CSX Corp. earlier this month, as well as larger Western railroads Union Pacific Corp. and Burlington Northern Santa Fe Corp.
CEO Wick Moorman added that Norfolk Southern has seen some pickup in business over the past few weeks.
“While I think it’s too early to tell if these are genuine green shoots or not, we’re at least encouraged we’re not seeing a large part of the lawn continue to die off,” he said.
Executives of the Norfolk, Va.-based railroad said they still expect shipping demand to slip through the end of the year compared with the same period in 2008.
“It does feel…like we’ve reached a bottom. It also seems likely that the economic recovery will take some time,” Moorman said.
The company thinks it could be a year before a significant recovery begins.
Norfolk Southern said late Tuesday its second-quarter earnings sank 45 percent, as widespread cost cuts could not balance a steep downturn in shipping demand.
Moorman said Norfolk Southern “is looking everywhere to try and reduce costs.” He didn’t rule out stashing more trains and locomotives or cutting more employees should business remain sluggish.
The company said 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 storing cars and locomotives because of slower demand.
Shares of Norfolk Southern fell 83 cents, or 1.9 percent, to close at $42.80. The stock has traded as high as $75.53 and as low as $26.69 in the past 12 months.
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