Norfolk Southern profit falls 32pc, sees regulatory snares ahead

NORFOLK Southern said fourth quarter net profit fell 32 per cent year on year to US$207 million drawn on a revenue of $2.1 billion, a decline of 16 per cent over all with coal falling 27 per cent, intermodal by 15 per cent and general merchandise by nine per cent.
Growth in the last quarter was attributed to incremental volume gains in the second quarter, but that its "biggest black cloud" for sustained revenue comes in the form of federal rules on train control, said its CEO Wick Moorman, who echoed the views of his rival railway bosses at CSX and the Union Pacific.
Mr Moorman said that the cost of "positive train control" systems by the Federal Railway Administration PTC, aimed at preventing collisions and other accidents would amount to $40 million in costs this year alone, amounting to $700 million by end of 2015.
"We will be forced to forego major capital expenditures for other critical areas of our property over that five-year period, he said. "And the result may well be less capacity than is required to handle traffic volumes, a diminished ability to provide good service, and even possibly a less safe working environment than we might have had otherwise.
Additionally it did not support the Senate Commerce Committee`s approval of a rail re-regulation bill, but hopes to work together to make changes to avoid opposition.