FILE - In this photo taken with a drone, portions of a Norfolk Southern freight train that derailed the previous night in East Palestine, Ohio, remain on fire at mid-day, Feb. 4, 2023. The costs associated with Norfolk Southern's fiery February derailment in Ohio have more than doubled to $803 million as the railroad works to clean up the mess and moves forward with all the related lawsuits. Norfolk Southern recorded another $416 million charge related to the East Palestine derailment on Thursday as part of its second-quarter earnings. (AP Photo/Gene J. Puskar, File)
Derailment costs grow for Norfolk Southern but railroad’s trains moving more smoothly
By Josh Funk/ The Associated Press
The costs related to the East Palestine derailment continue to grow to reach $966 million for Norfolk Southern, but the railroad’s service is improving and its insurance companies have started to pay their share of the cost of the crash in eastern Ohio early this year.
The Atlanta based railroad said this year’s third-quarter profit of $478 million, or $2.10 per share, was half of last year’s $958 million, or $4.10 per share. The results were hurt by the derailment costs, a drop in its fuel surcharge revenue and flat volume.
Without the derailment costs, the railroad would have made $601 million, or $2.65 per share.
While the cleanup from the February derailment continues, the railroad collected its first $25 million payment from its insurers. Norfolk Southern expects its insurance companies 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.
The analysts surveyed by FactSet Research expected Norfolk Southern to report earnings per share of $2.64, on average.
But the average speed of Norfolk Southern’s trains increased during the quarter to 20.5 mph. That’s higher than last year’s 19.1 mph average and also up from this year’s low point of 18.7 mph in the second quarter when one of its main tracks was still closed because of the derailment for most of the period. The average amount of time the railroad’s trains spend inside its railyards also decreased to 23.2 hours from last year’s 25.9 hours and 28.1 hours in this year’s second quarter.
The railroad’s revenue declined 11% to $2.97 billion. That’s just ahead of the $2.94 billion that Wall Street predicted.
Norfolk Southern now expects revenue to be down about 4% this year after fuel surchage revenue fell $254 million in the third quarter
Norfolk Southern is one of the nation’s largest railroads operating in the Eastern United States.