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Norfolk Southern Corp. Reports Operating Results (10-K)

February 15, 2012 | About:

Norfolk Southern Corp. (NYSE:NSC) filed Annual Report for the period ended 2011-12-31.

Norfolk Southern Corp. has a market cap of $24.04 billion; its shares were traded at around $69.42 with a P/E ratio of 13.6 and P/S ratio of 2.2. The dividend yield of Norfolk Southern Corp. stocks is 2.6%. Norfolk Southern Corp. had an annual average earning growth of 11.6% over the past 10 years. GuruFocus rated Norfolk Southern Corp. the business predictability rank of 3.5-star.

Highlight of Business Operations:

Many of NS’ negotiated fuel surcharges for coal and general merchandise traffic are based on the monthly average price of West Texas Intermediate Crude Oil (WTI Average Price). These surcharges are reset the first day of each calendar month based on the WTI Average Price for the second preceding calendar month. This two-month lag in applying WTI Average Price decreased fuel surcharge revenue by approximately $44 million in 2011, $28 million in 2010, and $50 million in 2009.

Automotive revenues rose 20%, compared to 2010, reflecting a 14% increase in traffic volume due to increased domestic production of North American light vehicles and a 5% improvement in average revenue per unit, driven by pricing gains and increased fuel surcharges.

In 2010, automotive revenues rose 23%, compared to 2009. A network redesign that eliminated reloadings at mixing centers resulted in fewer carloads and higher revenue per unit. Approximately 33,200 carloads were eliminated in 2010 as a result of the design changes in the automotive network. This reduction in carloadings was completely offset by higher volumes associated with the 40% increase in production of North American light vehicles.

Railway operating expenses in 2011 were $8.0 billion, up $1.1 billion, or 16% compared to 2010. Expenses in 2010 were $6.8 billion, up $833 million, or 14% compared to 2009. The increase in 2011 and 2010 were primarily due to higher fuel prices and increased volume-related expenses, while 2011 also reflected a $58 million unfavorable arbitration ruling. The railway operating ratio, which measures the percentage of operating revenues consumed by operating expenses, improved to 71.2% in 2011, compared with 71.9% in 2010 and 75.4% in 2009.

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