Norfolk Southern reports flat Q2 profit as its delays linger
Jul 27, 2022, 6:25 AM | Updated: 6:52 am
OMAHA, Neb. (AP) — Norfolk Southern continued to struggle with the delivery delays that have plagued freight railroads this year and reported flat second-quarter profit as the number of shipments it delivered slipped 3%.
The Atlanta-based railroad still beat Wall Street expectations as rate increases and higher fuel surcharges helped it generate $819 million profit, or $3.45 cents per share. A year ago, the railroad also reported $819 million net income, but before all the stock repurchases it has made in the past year that was $3.28 per share.
The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of $3.44 per share.
The railroad revenue grew 16% to $3.25 billion, which also topped Street forecasts. Six analysts surveyed by Zacks expected $3.14 billion.
Norfolk Southern CEO Alan Shaw said the railroad remains “steadfast in our commitment to service recovery” and it made significant progress in hiring more workers during the quarter, which is key to eliminating the problems that shippers have been complaining about this year.
Shaw said the railroad is already seeing some improvement as a result of its hiring and its efforts to streamline its operations. For several years, the railroad has been working to haul more freight with fewer locomotives and employees by lengthening trains and reorganizing the way it assembles cargo on its trains. Average train speed has improved to 18.5 miles per hour in July since the second quarter’s low of 17.5 miles per hour.
“Service is not yet where we want it to be, but I am encouraged by the progress,” Shaw said.
The railroad said it now has 7,190 trained employees helping move its trains, up from 6,966 in the second quarter, and it has another 895 new conductors in training.
Norfolk Southern said it expects revenue to grow more than 12% this year as the number of shipments and rates continue to grow.
Norfolk Southern is one of the nation’s largest railroads, and it operates about 19,500 miles (31382.21 kilometers) of track in 22 Eastern states and the District of Columbia.
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