Spartan Echo

OMAHA, Neb. (AP) — Norfolk Southern delivered a 15 percent increase in fourth-quarter profit, cutting costs sharply enough to offset a 3 percent decline in volume.

The Norfolk, Virginia, railroad earned $416 million, of $1.42 per share, in the quarter. That topped last year’s $361 million, or $1.20 per share, which included 19 cents per share of restructuring costs.

It also beat Wall Street’s per-share earnings expectations by 4 cents, according to survey by Zacks Investment Research.

“They did an incredible job of controlling costs in the fourth quarter,” Edward Jones analyst Dan Sherman said.

Norfolk Southern CEO Jim Squires said the railroad expects to cut another $100 million of costs this year after trimming $250 million in expenses last year. That’s part of a long-term restructuring plan to eliminate $650 million in costs by 2020.

Norfolk Southern had about 2,300 fewer employees in the quarter. That helped the railroad reduce compensation costs nearly 6 percent to $662 million, from the previous year’s $702 million.

The railroad’s revenue declined 1 percent to $2.49 billion in the quarter, just shy of analyst predictions.

Norfolk Southern officials declined to comment on reports that an activist investor is working with the former CEO of Canadian Pacific railroad to target its closest rival in the Eastern U.S., CSX railroad.

“We don’t comment on market rumors. We are single-mindedly focused on driving shareholder value through successful execution of our strategic plan, which, as you know, does include significant additional productivity improvements,” said Squires, who is also chairman of the railroad.

Citi analyst Christian Wetherbee said the core railroad performance was a bit disappointing because the results were helped by one-time income and a lower-than-expected tax rate.

For the year, the company reported a profit of $1.67 billion, or $5.62 per share, which was 10 percent higher than 2015’s $1.56 billion, or $5.10 per share. Revenue declined 6 percent to $9.89 billion.

Shares of Norfolk Southern Corp. shares reached new all-time highs above $119 after gaining 2 percent Wednesday morning to sell for $119.19.

Norfolk Southern shares have risen more than 10 percent since the beginning of the year, while the Standard & Poor’s 500 index has climbed roughly 2 percent. The stock has increased 76 percent in the last 12 months.

Norfolk Southern Corp. operates about 20,000 miles of track in 22 states and the District of Columbia.

_____

Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on NSC at https://www.zacks.com/ap/NSC

_____

Keywords: Norfolk Southern, Earnings Report