Norfolk Southern’s Q1 2017 Earnings Preview: Higher Shipments And Productivity Gains To Boost Earnings

by Trefis Team
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Norfolk Southern
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Norfolk Southern will release its Q1 2017 earnings result and conduct a conference call with analysts on April 26. [1] We expect the company to report improved earnings, driven by a broad-based recovery in shipment volumes.

Improving economic conditions in the U.S. boosted Norfolk Southern’s shipment volumes in Q1, particularly coal and metals shipments. Norfolk’s coal shipments rose 21% year-over-year in Q1 2017 as a result of higher demand for coal from utilities amid elevated natural gas prices. [2] In addition, higher domestic steel production as a result of lower competition from steel imports translated into a 10% year-over-year increase in the Metals & Equipment shipments sub-category. [2] Higher shipments volumes will drive growth in the company’s quarterly revenue.

Apart from top line growth, Norfolk Southern’s productivity improvement initiatives will help prop up the company’s bottom line. The company has chalked out plans to realize around $100 million worth of productivity gains in 2017, after realizing $250 million worth of efficiency gains in 2016. [1] Fleet rationalization and operational improvements such as better locomotive fuel efficiency are expected to translate into productivity gains for the company. The following tables summarize our expectations from Norfolk Southern’s Q1 earnings result.

NSC Q1 2017 Earnings Preview

Have more questions about Norfolk Southern? See the links below.

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 to hold first-quarter 2017 earnings conference call April 26, Norfolk Southern News Release [] []
  2. Norfolk Southern’s Weekly Carloading Report For Week Ended April 1, 2017, Norfolk Southern Website [] []
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