Norfolk Southern Reports Strong Q3 Earnings

(Reuters) – U.S. railroad operator Norfolk Southern (NYSE:NSC) reported third-quarter profit and revenue above Wall Street estimates on Tuesday, driven by strength in its merchandise and intermodal segments.

Shares of the company rose 3.6% in early trading.

Improving intermodal volumes, higher-than-inflation pricing, and a better operating ratio have helped the railroad maintain profitability, even as the freight industry faces a downturn.

Atalanta, Georgia-based Norfolk Southern reported an adjusted operating ratio of 63.4%, reflecting a 570 basis point improvement from the previous year. The operating ratio is a key metric indicating operating expenses as a percentage of revenue; a higher operating ratio indicates increased costs.

Severe weather events this quarter posed challenges for rail services, but the company responded positively, showing improvements in its operating ratio and better positioning to capture highway volumes.

CEO Mark George, who assumed the role in September, stated, "Our team drove productivity and grew volumes while demonstrating resiliency amid weather challenges. We delivered sequential and year-over-year margin improvement, positioning us on track to reach our adjusted operating ratio targets for the second half and full year 2024."

The company reported operating revenue of $3.1 billion for the third quarter, marking a 3% increase from the previous year and surpassing analysts' expectations of $3.08 billion, according to data compiled by LSEG.

During the quarter, Norfolk Southern closed two railway line sales, yielding nearly $400 million in cash proceeds and $380 million in gains. On an adjusted basis, the company reported a profit of $3.25 per share, exceeding analysts' estimates of $3.11.