A solid business year in 2012
After experiencing our best-ever economic performance in 2011, Norfolk Southern in 2012 had what our CEO describes as the railroad’s second best-ever year: We recorded our second best revenue, operating income, net income, and earnings per share.
For the second consecutive year, our railway operating revenues exceeded $11 billion, bolstered by a 6 percent increase in merchandise revenues and a 5 percent increase in intermodal revenues.
We moved a record 3.1 million units of conventional intermodal freight, which includes domestic, international, and premium traffic. Overall intermodal volume was up 5 percent, driven by an 11 percent increase in domestic volume. Intermodal traffic in 2012 accounted for 47 percent of the railroad’s freight by volume and generated 20 percent of total railway operating revenues, second only to coal.
In our merchandise markets, total volume rose 2 percent in 2012, buoyed by higher railcar loadings in the chemical, automotive, and forest product sectors. Our chemical business benefited from the growing U.S. production of gas and oil, including our first full year of rail shipments of crude oil to East Coast refineries. Our rise in automobile traffic reflected increasing vehicle sales, while improvements in the housing industry spurred traffic in forest products — both good signs for the U.S. economy.
Our coal business, hampered by low natural gas prices and mild weather, dragged on our revenues and volumes in 2012. Coal revenues were down 17 percent – or more than $500 million – and coal volume declined 13 percent versus 2011. For the year, coal generated 26 percent of our total railway operating revenues, a drop from 31 percent in 2011. Given the double-digit drop in coal revenues, the fact that total railway operating revenues were down by only 1 percent in 2012 is a positive reflection of our balanced business portfolio.
Because of a renewed emphasis on productivity, operating efficiencies, and effective cost controls, we reduced railway operating expenses by 1 percent for the year. Even with the losses in coal revenue, our operating ratio increased by less than 1 percent in 2012, to 71.7 from 71.2 in 2011. We achieved a record low operating ratio of 71.1 percent in 2008.
We remained at the forefront of job creation and economic development across our network in 2012. We helped to locate 64 new industries and 30 industry expansions along our railroad, representing $2.1 billion in customer investment and the potential for more than 6,100 new jobs and 141,000 carloads of new business. We hired more than 2,300 new employees during the year, bringing good-paying jobs to the communities we serve.
|Average No. of Employees||28,593||28,559||30,329||30,943|
|Railway Operating Revenues ($ billions)||8.0||9.5||11.2||11.0|
|Income from Railway Operations ($ billions)||2.0||2.7||3.2||3.1|
|Net Income ($ billions)||1.0||1.5||1.9||1.7|
|Total Assets ($ billions)||27.4||28.2||28.5||30.3|
|Total Debt ($ billions)||7.2||7.0||7.5||8.7|
|Total Debt to Total Capitalization Ratio||40.9%||39.7%||43.2%||47.1%|
|Stockholders’ Equity Per