Third quarter net income at Norfolk Southern increased by $460 million, a rise of 2 percent, and diluted earnings per share was $1.55, up 4 percent, compared with the third quarter of 2015.
In a news release, NS said the decline in operating revenue was due to reduced volumes and lower fuel surcharge revenue.
Nonetheless, NS outperformed the projections of Wall Street analysts that it would earn $1.45 per share, according to research conducted by Zacks Investment Research.
“Our continued focus on efficiency and asset utilization, balanced with our commitment to customer service, drove an operating ratio of 67.5 percent for the quarter and a record 68.7 percent for the first nine months, setting us well on the way to achieving productivity savings of about $250 million and an operating ratio below 70 percent for the year — even in the face of economic headwinds,” said NS Chairman, President and Chief Executive Officer James Squires in a statement.
Squares said NS is positioned for growth opportunities over the longer term.
During the third quarter of 2016, NS said its general merchandise revenue dropped 10 percent to $1.6 billion compared with 2015. The company’s five merchandise commodity groups reported the following year-over-year revenue results:
• Chemicals, $408 million, down 10 percent.
• Agriculture, $380 million, even.
• Metals/construction, $337 million, up 2 percent.
• Automotive, $236 million, down 4 percent.
• Paper/forest, $191 million, down 6 percent.
Intermodal revenue fell 7 percent to $575 million with volume falling 1 percent as a result of lower volume from Triple Crown Services, which was restructured last year.
Excluding Triple Crown Services, domestic intermodal volume and international volume rose 8 percent and 1 percent, respectively.
Coal revenue plunged by 18 percent to $397 million compared with the third quarter of 2015.
NS said that above-normal stockpiles and low natural gas prices combined to decrease coal volume by 15 percent.
Operating expenses fell 10 percent to $1.7 billion primarily due to cost-cutting initiatives, lower fuel expenses, the absence of last year’s restructuring costs, and gains from the disposition of operating property.
Income from railway operations remained flat at $820 million compared with third-quarter 2015. The 67.5 operating ratio improved 2.2 points on a year-over-year basis.