Norfolk Southern (NYSE:NSC), an Atlanta-based leading railroad company, saw its Q3 profits plunge by 50% to $478 million ($2.10/share), a significant drop from last year's figure of $958 million ($4.10/share). The decrease in profits is primarily attributed to costs associated with a February derailment that led to the evacuation of thousands and raised long-term health concerns. The derailment cleanup costs have now reached $966 million, with the first insurance payment of $25 million already received.
The company also reported a $254 million decrease in fuel surcharge revenue and flat volume. FactSet Research analysts had previously forecasted an EPS of $2.64 for Norfolk Southern. Without the burden of the derailment costs, the company's profits would have been higher at $601 million ($2.65/share).
Despite these setbacks, Norfolk Southern reported Q3 revenue of $2.97 billion, marking an 11% fall from previous figures but slightly surpassing Wall Street's predictions. CEO Alan Shaw remains optimistic about future growth, even with an expected 4% revenue drop this year.
Operational efficiency has shown improvement, with train speeds reaching 20.5 mph and railyard time reducing to 23.2 hours. These improvements come despite economic pressures on all railroads due to declining fuel surcharges and weak volume, as noted by Edward Jones analysts.
Interestingly, Norfolk Southern reported improved volume levels unseen since Q2 2022. However, following the announcement of these results, the company's shares hit a 52-week low.
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