NEW YORK -- Bucking widespread fears of a slowing economy, Conrail reported yesterday that it shipped more freight over the summer than during the same period last year.
Overall traffic rose 5.1 percent in the quarter that ended Sept. 30, but, because of a less profitable product mix, revenues increased only 1.4 percent.
That trend is continuing into the current quarter, said Gordon Kuhn, Conrail senior vice president, adding that in the first 15 days of the fourth-quarter, traffic continued to be slightly ahead of last year's.
"Everyone keeps waiting for traffic to weaken because of all the dire economic forecasts," said Anthony Hatch, an analyst with Paine Webber, "but it hasn't happened."
Philadelphia-based Conrail, with its heavy dependence in the Northeast on manufacturing, is considered potentially the most cyclical of all the major railroads. Consequently, its performance is of particular interest as the economy wavers.
James A. Hagen, Conrail's chief executive, said company executives have been in contact with customers and that worries are rampant but that "it's really fear of the unknown. Our volumes are holding up."
In year-to-year comparisons, Conrail's per-share income rose 18.1 percent, and its net income declined 17.2 percent. The results are significantly affected by a major capital restructuring undertaken by the railroad earlier in the year, when it spent $1.3 billion to repurchase about 27 million shares, or about 40 percent of the outstanding shares. As a result, its interest expense rose to $46 million from $20 million.
Several analysts called the carrier's results "tremendous," but given concern about deteriorating business conditions, the quarter's success was of less interest than future revenues. "They did a lot better than anyone thought, but this is already old news," Mr. Hatch said.
This year benefited in comparison to last year because the third quarter of 1989 was not particularly strong. A coal strike hurt business, and other areas began to reflect slowing traffic. Conrail began the year with conservative forecasts and has been relatively steadfast as other companies and analysts have lowered theirs.