Norfolk Southern said on Wednesday that it set records in the second quarter of 2021 for net income and diluted earnings per share, operating ratio and income from railway operations.
In a news release, NS said net income rose 109 percent to $819 million, or $3.28 diluted earnings per share from $392 million, or $1.53 diluted EPS, in the same quarter a year ago.
Income from railway operations rose 91 percent to $1.2 billion while the operating ratio was a record 58.3 percent from 70.7 percent a year ago.
Railway operating revenue of $2.8 billion increased 34 percent, driven by a 25 percent increase in volume and a 7 percent increase in revenue per unit. Railway operating expenses totaled $1.6 billion, an increase of 11 percent.
“We are even more confident about growth for the balance of this year,” NS CEO James Squires said during an earnings call.
NS executives said they expect revenue to increase by 12 percent this year, up from the previous forecast of 9 percent growth.
They project shaving up to 4.4 points off the operating ratio this year, an improvement from their earlier projection of a 3-point improvement.
Overall traffic volume was up 25 percent including a 29 percent gain in merchandise traffic, a 20 percent rise in intermodal and a 55 percent gain in coal traffic.
All figures are in comparison with the second quarter of 2020, which was marked by an economic downturn triggered by the COVID-19 pandemic.
“We are approaching pre-pandemic revenue levels,” said NS Chief Marketing Officer Alan Shaw. “However, the composition of our business has changed dramatically due to . . . trends in the overall economy that were accelerated by the pandemic.”
Shaw said one example of how NS was able to take advantage of those changes is carrying traffic serving consumer and manufacturing markets in the East.
Even as NS traffic grew during the second quarter, its payroll was 8 percent smaller.
Train are longer (14 percent) and heavier (16 percent). Yet the railroad said fuel efficiency improved 4 percent.
“These gains were achieved in part by the increased deployment of distributed power and more blending of previously separate traffic types on the same train,” Chief Operating Officer Cindy Sanborn said.
Sanborn said that in order to accommodate longer trains NS plans to lengthen passing sidings on some routes. She attributed the fuel efficiency gains to longer train lengths.
NS now has 1 percent fewer locomotives than it did a year ago. It has retired older locomotives and stepped up converting DC units to AC traction.
Fewer locomotives are being bad ordered spending time in repair shops. The NS locomotive workforce has fallen by 55 percent in size compared with 2018.
NS officials said they are focusing on improving local service in yards by changing staffing to make service more consistent and terminals more productive. More remote control locomotives are being in used as part of these efforts.
Sanborn said NS has reduced switching volume in Chicago by building trains in its Elkhart, Indiana, yard that can be directly interchanged with other railroads.
Train crews have received smartphones that allow them to provide real-time reporting of switching moves. NS plans to implement a new local train reporting application this summer to improve reporting of first- and last-mile service.
Tags: James Squires, Norfolk Southern, NS financial figures, NS financial outlook, NS financial results, NS quarterly financial results
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