Norfolk Southern Earnings Rise 25%, Helped by Cost Cuts
Norfolk Southern Corp. reported the best year-over-year improvement in first-quarter rail industry earnings, boosting net income 25% to $387 million, or $1.29 per share, helped by expense reductions and improved results for commodity groups, particularly automotive shipments.
Earnings in last year's first quarter were $310 million, or $1 per share. Revenue fell 6% to $2.4 billion, but a 13% drop in costs led to an operating ratio of 70.1, an improvement of 8 percentage points year-over-year. Shipments declined 2% because of a 23% drop in coal traffic.
“Our strong first-quarter results demonstrate the significant progress we are making in line with our strategic plan,” Chairman and CEO James A. Squires said. “Our focus on strengthening Norfolk Southern is yielding results, and the company is now on track to achieve productivity savings of about $200 million and an operating ratio below 70 in 2016.”
Shipments of new cars and light trucks rose 18%, producing 16% higher revenue of $254 million. Paper, forest products and agriculture-related revenue increased, but chemicals, metals and construction revenue declined.
Truck-rail shipments were even with the 2015 quarter, reflecting higher international volumes and lower domestic shipments due to near elimination of Triple Crown Services domestic freight.