Norfolk Southern railroad hauls in 23% more profit

(James St. John/ Wikimedia Commons)
(James St. John/ Wikimedia Commons)

Norfolk Southern Corp. delivered a 23 percent improvement in its first-quarter profit as the railroad began implementing a comprehensive plan to cut costs and improve productivity.

The Norfolk, Virginia-based company said it earned $677 million, or $2.51 per share, in the quarter. That’s up from $552 million, or $1.93 per share, last year.

The per-share results easily beat the $2.17 average estimate that analysts surveyed by Zacks Investment Research predicted.

“Our first-quarter results reflect the initial steps in the implementation of our new strategic plan that are transforming our company,” CEO Jim Squires said.

These are the first quarterly results since Norfolk Southern announced plans in January to follow the rest of the industry in overhauling its operations. CSX and Union Pacific have had great success over the last couple of years by implementing a model that runs trains on a tighter schedule with fewer locomotives and fewer employees.

Citi analyst Christian Wetherbee said the railroad handily beat his profit estimate by 32 cents per share with modest revenue growth and solid cost controls.

Norfolk Southern’s revenue grew 5 percent to $2.84 billion even though the number of shipments it delivered in the quarter was flat. The revenue topped the Wall Street forecast of $2.8 billion.

Norfolk Southern shares climbed 3.4 percent to $208.59 in midday trading.

The railroad is in the process of building a new headquarters in Atlanta. Norfolk Southern operates about 20,000 miles of track in 22 states and the District of Columbia.

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John Mangalonzo (john@localvoicemedia.com) is the managing editor of Local Voice Media’s Virginia papers – WYDaily (Williamsburg), Southside Daily (Virginia Beach) and HNNDaily (Hampton-Newport News). Before coming to Local Voice, John was the senior content editor of The Bellingham Herald, a McClatchy newspaper in Washington state. Previously, he served as city editor/content strategist for USA Today Network newsrooms in St. George and Cedar City, Utah. John started his professional journalism career shortly after graduating from Lyceum of The Philippines University in 1990. As a rookie reporter for a national newspaper in Manila that year, John was assigned to cover four of the most dangerous cities in Metro Manila. Later that year, John was transferred to cover the Philippine National Police and Armed Forces of the Philippines. He spent the latter part of 1990 to early 1992 embedded with troopers in the southern Philippines as they fought with communist rebels and Muslim extremists. His U.S. journalism career includes reporting and editing stints for newspapers and other media outlets in New York City, California, Texas, Iowa, Utah, Colorado and Washington state.