Norfolk Southern’s third-quarter net income plunged by 50% in large part because of a $163 million charge resulting from the early February train derailment in East Palestine, Ohio.
Rail cars carrying hazardous materials were among those that derailed on Feb. 3, raising concerns from residents in East Palestine and from surrounding communities in Ohio and Pennsylvania about adverse environmental impacts. Shortly following the derailment, NS and public officials vented the derailed rail cars carrying vinyl chloride because of concerns that those rail cars could explode.
Net income was $478 million, or $2.10 per diluted share, for the third quarter of 2023, compared with net income of $958 million, or $4.10 per diluted share, for the third quarter of 2022.
The third-quarter 2023 amount includes a $163 million charge associated with the eastern Ohio accident, NS (NYSE: NSC) said. That figure also includes initial insurance recovery of $25 million. The primary driver of those charges were site remediation efforts, NS told FreightWaves.
Income from railway operations was $756 million, compared with $1.3 billion in Q3 2022.
Excluding the incident charge, income from railway operations was $919 million, while diluted earnings per share was calculated at $2.65.
Operating revenue was $2.97 billion in the third quarter, down 11% y/y. Meanwhile, operating expenses rose 7% to $2.2 billion on higher materials and other expenses, as well as the East Palestine incident charge.
“In the third quarter, we continued to invest in our people and our assets to lay the foundation for our innovative strategy,” NS President and CEO Alan Shaw said in a Wednesday news release. “Part of charting a better way forward for Norfolk Southern is building solid operational disciplines that move us toward consistency, all to enable productivity enhancements and growth in the quarters ahead. We are building the safe, reliable, and resilient railroad our customers and shareholders expect, and we have an incredibly bright future.”
Subscribe to FreightWaves’ e-newsletters and get the latest insights on freight right in your inbox.
Click here for more FreightWaves articles by Joanna Marsh.
