Norfolk Southern Corp., created seven months ago by the merger of two railroads, told financial analysts here today that the combined companies in 1982 suffered a 17.8 percent decline in net income from their results as separate companies a year earlier.
In the fourth quarter alone, earnings of $80.8 million ($1.29 a share) represented a 44.2 percent drop from the same quarter a year earlier, company officials said.
Robert B. Claytor, chairman and chief executive officer, said, "Unfortunately, the seven months that we have been consolidated was a time of declining business, and I honestly believe the results for that period do not in any way reflect the real potential of Norfolk Southern."
Almost 40 percent of Norfolk Southern's revenue comes from hauling coal, coke and iron ore, and those industries have been hit particularly hard by economic conditions.
Despite the bad news, Norfolk Southern made money last year. The consolidated financial statements for the former Norfolk and Western and Southern railroads showed net income of $411.4 million ($6.57), down from $500.3 million ($8.08) in 1981. Revenues dropped 6.5 percent to $3.36 billion from $3.6 billion.
Fourth-quarter revenues fell to $771.3 million from $946.4 million in the comparable period of 1981. Earnings during the fourth quarter of 1981 were $144.9 million.
"If you compare us with the rest of the railroad industry, which I invite you to do, our performance is pretty good," Claytor said.
"It would appear that the first half of 1983 will compare unfavorably with 1982," he said. Last year, Norfolk Southern started 115.2 million tons of coal on their way to market and is projecting a 5 percent decline this year. "I hope that's not too optimistic and, in fact, we are not achieving that forecast in the first two weeks of January," Claytor said.
Analysts seemed most interested in whether the railroad will compete vigorously to retain its share of the coal-carrying market. They pointed to reports of vigorous competition from both Conrail and CSX and a recent agreement CSX reached to carry coal to Vepco.
"If our rates are out of line, we'll ultimately lose the business," Claytor said. "But we intend to keep competitive. . . . We will do whatever we have to do, provided we can make a reasonable profit."