Norfolk Southern’s Q3 2016 Earnings Review: Decline In Operating Costs Boosts Results As Company Focuses On Cost Reduction To Counter Top Line Headwinds
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.
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Notes:- Norfolk Southern’s Q3 2016 Earnings Call Transcript, Seeking Alpha [↩]