Norfolk Southern’s Q3 2016 Earnings Review: Decline In Operating Costs Boosts Results As Company Focuses On Cost Reduction To Counter Top Line Headwinds

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Norfolk Southern

Norfolk Southern reported an improvement in its Q3 EPS, with a decline in operating costs offsetting the impact of lower revenue on profits. A decline in shipments, driven by lower demand for coal from utilities amid weak natural gas prices, and lower fuel surcharge revenue, translated into a decline in the company’s revenue. However, a decline in Norfolk Southern’s operating costs, stemming from lower volume-related expenses and the company’s cost reduction initiatives, offset the impact of top line headwinds on the company’s bottom line. Norfolk Southern expects to realize productivity savings of around $250 million for the full year 2016. [1] With a decline in shipments expected to weigh on Norfolk Southern’s operating performance in Q4 as well, the company’s cost reduction initiatives will stand it in good stead going forward.

NSC Q3 2016 Earnings

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Norfolk Southern

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Notes:
  1. Norfolk Southern’s Q3 2016 Earnings Call Transcript, Seeking Alpha []