Number four U.S. railway Norfolk Southern reported net income of $387 million for the first quarter compared with $310 million during the same 2015 period, according to the company’s most recent financial statements.
Norfolk Southern Corp. reported a profit of $387 million in the first quarter of 2016, ended March 31, a 25 percent increase from $310 million in the same 2015 period.
Railway operating revenues fell 6 percent year-over-year to $2.4 billion for the quarter, however, as overall volumes declined 2 percent from Q1 2015, primarily the result of lower coal volumes. Diluted earnings per share stood at $1.29 per share in Q1 2016, a 29 percent year-over-year increase.
The company’s merchandise revenues grew 2 percent to $1.5 billion for the quarter, led by an 18 percent increase in automotive traffic, as volume grew in all business groups except chemicals, which was impacted by fewer crude oil shipments due to low oil prices. In individual commodity groups, revenues from chemical and metals/construction volumes dipped 3 percent each to $419 million and $300 million, respectively, while agriculture revenues inched up 3 percent to $386 million, automotive spiked 16 percent to $254 million, and paper/forest grew 3 percent to $190 million.
NS intermodal revenues fell 12 percent to $522 million compared with the first quarter of 2015, as volumes remained relatively flat. Growth in international intermodal volumes was offset by lower domestic volumes due to the restructuring of the company’s Triple Crown Services subsidiary, the railway said.
Coal revenues continued to plummet, down 23 percent to $349 million for the quarter, as mild winter temperatures, low natural gas prices, and a weak global export market caused volumes to drop 23 percent year-over-year as well.
Railway operating expenses, on the other hand, decreased 13 percent to $1.7 billion compared with the same 2015 period, thanks to lower fuel costs and targeted expense reduction initiatives.
“Our strong first-quarter results demonstrate the significant progress we are making in line with our strategic plan,” NS CEO James A. Squires said in a statement. “Since I became CEO in June, our team has been committed to streamlining operations, reducing expenses and maintaining superior customer service levels.
“Our focus on strengthening Norfolk Southern is yielding results, and the company is now on track to achieve productivity savings of about $200 million and an operating ratio below 70 in 2016,” he added. “We are confident the continued execution of our strategic plan will deliver superior shareholder value by best positioning Norfolk Southern to succeed while ensuring the company is prepared to capture revenue and volume growth opportunities in 2016 and beyond.”
Norfolk Southern began implementing its strategic plan, designed to cut costs and increase profitability, amid a highly-publicized takeover attempt by Calgary-based Class I railroad Canadian Pacific. NS has said previously the company expects to achieve annual productivity savings from the plan of more than $650 million and an operating ratio below 65 percent by 2020.
CP announced earlier this month it would abandon its attempt to acquire NS after being met with strong opposition from other Class I railroads, shipper, rail unions, parcel carriers UPS and FedEx, and federal lawmakers, to name a few.
NS profits jump 25% in Q1 2016
