Norfolk Southern’s fourth-quarter profit fell 33% because of the ever growing costs of the cleanup of last year’s fiery derailment in eastern Ohio
Norfolk Southern’s fourth-quarter profit falls 33% as Ohio derailment costs continue to growBy JOSH FUNKAP Business WriterThe Associated Press
Norfolk Southern’s fourth-quarter profit fell 33% because of the ever growing costs of the cleanup of last year’s fiery derailment in eastern Ohio, but the railroad did deliver 3% more shipments during the quarter and even without the costs related to that toxic crash its profits still would have been down 14%.
The Atlanta-based railroad said it earned $527 million, or $2.32 per share, during the quarter. That’s down from $790 million or $3.42 per share, a year earlier. Without the $150 million in additional derailment costs, Norfolk Southern would have made $677 million, or $2.83 per share.
The analysts surveyed by FactSet Research predicted that Norfolk Southern would make $2.86 per share, so the results fell just short of that.
The railroad now estimates the total costs related to the East Palestine derailment last February near the Ohio-Pennsylvania border will top $1.1 billion, but that total will only continue to grow over time because the cleanup is still ongoing and Norfolk Southern faces lawsuits and additional penalties that haven’t been settled.
The railroad said it did receive an additional $76 million in insurance payments related to the derailment during the quarter, and it expects those policies to eventually cover most of the cost of the derailment that forced thousands of people to evacuate their homes and left residents with worries about possible long-term health effects. Norfolk Southern has now received $101 million of insurance payments.
Norfolk Southern plans to cut 7% of its managers this year to help reduce its costs.
Norfolk Southern CEO Alan Shaw said he’s proud of the “unwavering dedication” his employees showed in the way they responded to the derailment and worked to make the railroad safer afterward.
“The fourth quarter marked the end of a challenging, yet transformational year for Norfolk Southern,” Shaw said.
The volume growth the railroad reported is an encouraging signal about the economy, but even with that Norfolk Southern’s revenue slipped 5% to $3.07 billion. That was also behind the $3.087 billion that the analysts surveyed by FactSet predicted.
The railroad does predict that its revenue will grow about 3% in 2024 as it continues to work to become more productive throughout the year.
