Norfolk Southern posts rise in quarterly profit on cost control

By Apratim Sarkar

Jan 29 (Reuters) – Norfolk Southern reported a rise in fourth-quarter profit on Thursday on cost controls amid uneven freight demand and persistent macroeconomic strain.

The results come after the U.S. Surface Transportation Board earlier this month sent back Union Pacific’s proposed $85 billion merger with the company for revision.

The Surface Transportation Board deemed the December merger filing incomplete, but Union Pacific CEO Jim Vena said the request is routine and the deal is still on track for a close in the first half of 2027.

The rejection of the merger application was a procedural issue over “completeness” rather than merits of the deal, Norfolk CEO Mark George said on a post-earnings call on Thursday. He added the companies would file a more detailed application and “get it in right”.

In October, Norfolk said it expected future top-line fluctuations from “competitor response” to the proposed merger, which already drove a 2% drop in third-quarter intermodal volumes. Intermodal shipping involves two or more means of transportation for goods.

Norfolk’s CEO said on the call that the company would keep a tight grip on costs in 2026 and was ready to handle “a range of volume outcomes” as demand stays uncertain.

The company’s railway operating revenue for the fourth quarter fell 2% to $3 billion from a year earlier. Railway volumes dropped 4% from a year ago.

Atlanta, Georgia-based Norfolk reported an adjusted profit of $3.22 per share for the quarter, compared with $3.04 per share a year earlier. Analysts expected an adjusted profit of $2.76 per share, according to data compiled by LSEG.

The company’s shares were up 1% in morning trade.

On an adjusted basis, the company’s operating ratio – a key measure of efficiency – was 65.3% for the quarter, a 40-basis-point deterioration from a year earlier.

(Reporting by Apratim Sarkar; Editing by Maju Samuel)