Thankfully for many Midwesterners, the floodwaters that ravaged their homes and destroyed nearby crops last month receded about as quickly as they rose. While people continue to sift through the damage, at least one set of companies so far appears to have escaped serious harm.
Shunning expectations of direct impacts from the flood on the bottom line, and establishing the potential for the industry to maintain profitability despite rocketing fuel costs, railroad operator Norfolk Southern
The recent quarter was not without its challenges, though. Fuel costs rose by 76% over the second quarter 2007, yielding a 16% hike in operating expenses. Freight volumes declined for both intermodal traffic and general merchandise. Thanks to offsetting rate hikes and stronger volume for coal, however, Norfolk Southern delivered higher revenues across all freight categories.
Given the net performance of domestic coal stocks and the storied rise in coal demand around the world, Fools may not be surprised to learn that Norfolk Southern increased operating revenues from coal transport by 34% to $775 million on a 3% increase in volume. While coal for delivery to domestic utilities remained flat at 36 million tons, the amount of coal, coke, and iron ore shipped for export jumped an abrupt 63% over the prior year to 6.2 million tons.
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By demonstrating its ability to operate efficiently and profitably despite challenging market conditions, Norfolk Southern epitomizes the type of quality company Warren Buffett loves to invest in. Fellow Buffett holding Burlington Northern Santa Fe
Fool contributor Christopher Barker captains yachts and writes about stocks. He can also be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns no shares in the companies mentioned. The Motley Fool has a disclosure policy.