Norfolk Southern Review: american shipping company

Обзор norfolk southern: американская транспортная компания

Norfolk Southern (NYSE: NSC) - a large American transport company, which provides freight rail services. The company has almost two hundred years of development history, and it received its current name in 1982 after the merger of two companies: Norfolk & Western Railway и Southern Railway.

About company

The main activity of Norfolk Southern Corporation is the railway transportation of raw materials, semi-finished and finished products mainly in the South-East, East and Midwest United States. As of 31 December 2020, the Norfolk Southern Corporation's rail network is about 19 300 miles and goes through 22 State and District of Columbia.

The main transportation routes of the company:

  1. New York - Chicago via Allentown and Pittsburgh.
  2. Chicago - Macon via Cincinnati, Chattanooga and Atlanta.
  3. Central Ohio - Norfolk via Columbus and Roanoke.
  4. Birmingham - Meridian.
  5. Cleveland - Kansas City.
  6. Memphis - Chattanooga.

Обзор norfolk southern: американская транспортная компания

The structure of the company's income, million dollars

Transportation segmentRevenueShare in the total result
Agriculture, timber and consumer goods57821%
Chemicals49418%
Metals40214%
Automotive products2067%
Intermodal transportation80129%
Coal31811%

Current activity

Norfolk Southern Corporation Unveils New Development Plan in 2019, with which the board of directors wanted to improve efficiency and productivity, improve financial results, as well as to reduce and modernize your fleet, to ensure an increase in the average speed of trains, train speed, and reduce the average parking time of wagons in terminals, terminal dwell.

Обзор norfolk southern: американская транспортная компания

Обзор norfolk southern: американская транспортная компания

Обзор norfolk southern: американская транспортная компания

Profit distribution

Norfolk Southern Corporation is a company with a stable dividend history and always strives to return the highest possible return to shareholders. So, eg, in 2017, the company received additional profit of $ 3.482 billion due to Trump's tax reform, then immediately increased dividends and buyback.

Обзор norfolk southern: американская транспортная компания

Обзор norfolk southern: американская транспортная компания

Обзор norfolk southern: американская транспортная компания

Financial results and forecast for 2021

Norfolk Southern Corporation has shown strong financial performance over the past five years: the annual EBITDA result is $ 4-5 billion. Taking into account the first half of the year, the company in 2021 may show data, which will be similar from 2018 or 2019.

Norfolk Southern Corporation management forecast for 2021:

  1. Revenue will increase by 12% against the backdrop of growth in traffic in all segments: forest products, chemicals, metals, automotive goods, intermodal transportation, coal.
  2. Capital expenditures will be at the level of $ 1.6 billion.
  3. Dividend payments will amount to 35-40% of net profit.
  4. The buyback of shares will take place at the expense of excess cash.

Financial results for the last 5 years, billion dollars

RevenueEBITDANet profitNet debt
20169,8884,1041,6689,256
201710,5514,6455,4049,146
201811,4585,0632,66610,787
201911,2965,1272,72211,616
20209,7894,1602,01311,566
1п20215,4382,7681,49212,047

Comparison with competitors

EV / EBITDAP / ENet debt / EBITDA
Norfolk Southern Corporation14,2722,622,33
CSX Corporation12,9421,102,04
Kansas City Southern20,6037,582,40
Union Pacific Corporation15,5923,682,59

Arguments for

Growth rates in 2021. The company records an increased demand for its services. Noticing this fact, management has increased its annual forecast of financial results.

High level of profit sharing. Norfolk Southern Corporation for the first 6 months of 2021 returned $ 2.021 billion to shareholders through dividends and buybacks with a total capitalization of $ 61.79 billion. The profitability for the first half of the year was 3,3% vs 2,2% у CSX Corporation.

Moderate debt burden. The company currently has a net debt of $ 12.047 billion., and the multiplier “Net debt / EBITDA »equal 2,33.

Green Agenda. Norfolk Southern Corporation plans to reduce greenhouse gas emissions by 2034 42%.

Arguments against

Older fleet of locomotives and wagons. Whose average age is 26 years against 21 year at CSX Corporation.

Biden's legislative initiatives. White House Promotes Influence Scheme, to force large carriers to subsidize smaller companies.

What is the bottom line

Norfolk Southern Corporation is a financially sound company, which aims to maximize return on profit to its shareholders. Even the global financial crisis in 2020 did not prevent the railway carrier from maintaining buyback - the buyback decreased, but did not reset - and ensure a stable level of dividend payments.

Rapid recovery of the US economy and business of Norfolk Southern Corporation, which has almost reached its dock-like values, indicate, that the company will continue to adhere to the current development strategy in the future - at least until the adoption of a new business plan.

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