Oct 22 (Reuters) – Norfolk Southern beat Wall Street estimates for third-quarter adjusted profit on Thursday, as the railroad operator benefited from strong freight demand, despite higher fuel costs that were largely recovered through surcharges.
Railroads have benefited from tight trucking capacity, as a driver shortage has prompted some shippers to move freight by rail, particularly in the intermodal segment that competes directly with long-haul trucking.
The industry has mitigated the impact of higher fuel costs — driven by the war in the Middle East — by billing customers through surcharges, while benefiting from operational efficiencies and steady intermodal volumes.
US gasoline prices have hovered above $4 a gallon since March and averaged about $4.27 per gallon on Thursday, according to AAA data, maintaining cost pressure across the transportation sector.
Atlanta, Georgia-based Norfolk reported an adjusted profit of $3.62 per share, compared with $3.30 per share a year earlier. Analysts expected an adjusted profit of $3.47 per share, according to data compiled by LSEG.
The company’s railway operating income for the quarter jumped 12.9% to $3.5 billion from a year earlier.
On an adjusted basis, the company’s operating ratio – a key measure of efficiency – was 67.4% for the quarter, deteriorating by 280 basis points from a year earlier.
(Reporting by Apratim Sarkar in Bengaluru; Editing by Vijay Kishore)
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