Tax cuts boost Norfolk Southern's fourth-quarter profit
By JOSH FUNK
Jan. 24, 2018
OMAHA, Neb. (AP) — Norfolk Southern said the recent tax cuts added nearly $3.5 billion to its bottom line in the fourth quarter, but even without that the railroad's profits were up 17 percent.
The Norfolk, Virginia-based company said Wednesday it earned $3.97 billion, or $13.79 per share. But without the changes in its tax liability, Norfolk Southern reported $486 million in net income, or $1.69 per share.
That's up from last year's $416 million, or $1.42 per share, and the results topped the $1.56 per share that analysts surveyed by Zacks Investment Research.
"Norfolk Southern is open for growth, and we are optimistic as we head into 2018 that the current economic environment will provide an opportunity for continuing growth," CEO Jim Squires said.
The railroad said its revenue grew 7 percent to $2.67 billion during the quarter as it hauled 5 percent more carloads of freight. Six analysts surveyed by Zacks expected $2.64 billion in revenue.
Norfolk Southern is about half way through a plan to reduce its expenses by $650 million by 2020, and it has already cut about $400 million. Edward Jones analyst Dan Sherman said that plan gives him some confidence the railroad will continue to improve.
Sherman said most of the changes Norfolk Southern has proposed have already been implemented by other major freight railroads and have been effective.
Citi analyst Christian Wetherbee said Norfolk Southern's solid quarter was helped by a $25 million land sale.
Separately, the company said Tuesday its board increased its quarterly dividend by 18 percent to 72 cents per share. The dividend is payable March 10 to shareholders of record Feb. 2.
For the year, the company reported profit of $5.4 billion, or $18.61 per share. Revenue was reported as $10.55 billion.
Norfolk Southern shares have risen almost 5 percent since the beginning of the year, while the Standard & Poor's 500 index has climbed 6 percent. In afternoon trading, the stock fell $1.90 to $149.76.
Norfolk Southern 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