(Reuters) – U.S. railroad operator Norfolk Southern on Wednesday posted a quarterly profit that beat analysts’ estimates, helped by cost cuts implemented to improve margins and better-than-expected insurance recoveries related to a costly derailment.
Shares of the company were up 4% in early morning trading.
Norfolk had taken a hit of about $1.4 billion in last two years due to a derailment in Eastern Ohio in 2023 that released over 1 million gallons of hazardous materials and pollutants near the state’s border.
Norfolk implemented voluntary and involuntary job cuts last year that helped offset some of that impact. Insurance recoveries related to the accident exceeded expenses by $43 million in the fourth quarter, Norfolk added.
Excluding fuel surcharges, the company reported operating revenue of $2.81 billion for the quarter ended Dec. 31, up 2% from a year earlier.
It reported an adjusted operating ratio of 64.9%, representing a 390-basis-point improvement from a year ago. The ratio is a keenly watched metric that indicates operating expenses as a percentage of revenue. A higher operating ratio reflects an increase in costs, suggesting lower profitability.
Norfolk reported an adjusted profit of $3.04 per share for the reported quarter, above analysts’ estimates of $2.95 per share, according to data compiled by LSEG.
Total revenue fell 2% to $3.02 billion. Analysts, on average, expected revenue of $3.02 billion.
(This story has been corrected to fix revenue figure to $3.02 billion from $3 billion in paragraph 8, and to add the dropped words ‘excluding fuel surcharges’ in paragraph 5 and ‘adjusted’ in paragraph 7)
(Reporting by Anshuman Tripathy in Bengaluru; Editing by Krishna Chandra Eluri and Shailesh Kuber)
