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Norfolk Southern reports record Q2 net income increase

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By JIM ROSS

For The State Journal

Increased coal shipments helped Norfolk Southern Corp. to record earnings in the second quarter of this year.

The company reported net income of $562 million July 23, up 21 percent from $464 million in the second quarter of last year. Net income for the first half totaled $930 million, up from $915 million a year ago.

Coal revenues increased 7 percent to $672 million in the second quarter compared with the same period of 2013, with volume up 3 percent, the result of increased demand for utility coal from stockpile replenishment in response to a severe winter and higher natural gas prices, which offset lower export volume. It was the first quarterly revenue increase in coal for Norfolk Southern since 2011.

Revenue improvements in coal largely resulted from increased business from utilities in the South. Business there increased by 23 percent in the quarter, which partially offset a 3 percent decline in Northern utility volume, according to Don Seale, chief marketing officer.

In the quarterly earnings call with investment analysts, Seale said utilities drew down their coal stockpiles during an unusually hard winter and are slowly building them back up to normal levels.

Seale said traffic on the Heartland Corridor through southern West Virginia continues to improve. The Heartland Corridor carries shipping containers, mostly involving international trade, that move between Norfolk, Virginia and Chicago, with access to the Columbus, Ohio market. Intermodal traffic on the Heartland Corridor was up 15 percent in the second quarter, Seale said. The railroad can handle more intermodal capacity on the Heartland Corridor without having to add trains, Seale said.

West Virginia authorities are building a truck-to-rail intermodal facility along the Heartland Corrdior at the Wayne County community of Prichard to attract and encourage domestic and international container shipping by rail.

Seale also said Norfolk Southern expects to see growth in shipments of commodities related to the production of natural gas, such as frac sand, and natural gas liquids and liquid petroleum gases.