Shares of Norfolk Southern Corp. rose amid a sharply lower broader market on Wednesday, as investors cheered the freight railroad operator's 35 percent jump in third-quarter profit.
Shares of Norfolk Southern rose 67 cents, or 1.2 percent, to $54.54. Meanwhile, the Dow Jones industrial average closed down more than 514 points.
The Norfolk, Va.-based company said late Tuesday it earned $520 million, or $1.37 per share, compared with $386 million, or 97 cents per share in the third-quarter of 2007.
The results, driven by surging coal revenue and improving efficiency, handily beat Wall Street's expectations.
Coal revenue surged 52 percent to $876 million in the quarter. In a conference call Wednesday, Executive Vice President and Chief Marketing Officer Donald W. Seale said that global coal supply remains tight because of problems in Australia with port congestion and rail capacity. China's high prices have also kept Europeans turning to the U.S. for coal, he said, which has kept demand high.
Intermodal revenues rose 16 percent to $560 million. Seale said he expects to see continued growth in this segment as freight continues to shift from truck to rail. Strength in the domestic business is expected to offset weakness in its intermodal import business in future quarters.
Intermodal business involves the transfer of freight from one method of transportation to another, such as truck to train.
Overall, traffic fell 1 percent in the third quarter, as sinking carloads of automobiles and housing-related products were countered higher coal volumes. Seale expects plunging production and plant shutdowns at U.S. automakers to continue to hurt the railroad in the fourth quarter, most notably from plant closures at General Motors Corp. and Chrysler.
Seale said the impact of these closures will be somewhat offset by business at new Toyota and Honda plants.