Norfolk Southern (NYSE:NSC), a major railway operator in the Eastern United States, reported a significant drop in its third-quarter earnings due to the train derailment incident that occurred in East Palestine, Ohio in February. The company's income for the quarter was $756 million, which included a hefty $163 million charge related to the derailment. The company's earnings per share plummeted from $4.10 to $2.10 year-over-year, marking a 35% drop when adjusted for the derailment charge.
The derailment led to evacuations, and potential long-term health concerns, and resulted in a closure of main tracks for most of the second quarter, causing a drop in fuel surcharge revenue by $254 million. Despite these challenges, the company saw an increase in average train speed to 20.5 mph and a decrease in railyard dwell time to 23.2 hours.
The company's adjusted earnings of $2.65 per share fell slightly short of the FactSet analysts' expectation of $2.69 per share. However, despite an 11% decline, Norfolk Southern's operating revenue reached $3 billion, surpassing the market consensus of $2.94 billion as polled by FactSet.
The railway operator also received its initial insurance recovery of $25 million and anticipates a 4% revenue decline this year due to the impacts of the derailment. The financial update was first reported by Dean Seal on Wednesday and was subsequently disseminated by Dow Jones Newswires.
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