Norfolk Southern’s Q2 profit doubles as volume returns
OMAHA, Neb. (AP) — Norfolk Southern’s second-quarter profit more than doubled as the number of shipments the railroad hauled rebounded 25% from the worst of the coronavirus pandemic a year ago.
The railroad said it earned $819 million, or $3.28 per share. That is up from $392 million, or $1.53 per share, a year ago.
The results beat Wall Street expectations. The analysts surveyed by FactSet expected Norfolk Southern to report earnings per share of $2.95.
A year ago, the number of shipments the railroad delivered fell 26% as the restrictions designed to slow the spread of the virus slowed the economy to a crawl. This year, shipments were up in every category as business continued to recover. The biggest jump came in automotive shipments where the number of carloads the railroad delivered more than doubled over last year when many auto plants were shut down.
Norfolk Southern’s revenue surged 34% to $2.799 billion in the quarter. That also topped the $2.75 billion that analysts predicted.
The railroad boosted its outlook for the year. Norfolk Southern said Wednesday that it now expects revenue to grow 12% this year as shipments continue to recover, up from its previous forecast for a 9% increase.
“We expect our current economic momentum to continue,” the railroad’s Chief Marketing Officer Alan Shaw said. “The overall economy continues to surprise to the upside.”
Citi Research analyst Christian Wetherbee said Norfolk Southern’s results were good and continued a string of strong reports from U.S. railroads, which all benefitted from the rebound in shipments. He said it appears that railroads will be able to increase prices enough to offset inflation.
Edward Jones analyst Jeff Windau said the results show how important increasing volume is to the railroads. Norfolk Southern easily overcame higher fuel costs and congestion in key parts of the rail network because shipping volume was up so much.
The Norfolk, Virginia-based company is one of the nation’s largest railroads, and it operates about 19,500 miles of track in 22 Eastern states and the District of Columbia.
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