Norfolk Southern’s derailment insurance payments provide boost but even without that profits were up
A Norfolk Southern freight train passes through Homestead, Pa., Wednesday, March 12, 2025. (AP Photo/Gene J. Puskar, File)
Norfolk Southern’s quarterly profits were again inflated by insurance payments related to its disastrous 2023 derailment in eastern Ohio, but even without that, the railroad’s profits still grew.
The Atlanta-based railroad reported a major rebound in its results Wednesday with $750 million profit, or $3.31 per share, in the first quarter. Last year, the first quarter results of $53 million, or 23 cents per share, were held down by the $600 million class action settlement the railroad agreed to pay residents near the East Palestine derailment.
Since last year’s second quarter, Norfolk Southern has been consistently collecting more in insurance payments than it was spending on the derailment cleanup and response, so it’s bottom line has received a boost each of the last several quarters. In the first quarter, the railroad received $141 million in insurance payments. Without that, it would have earned $609 million, or $2.69 per share, compared to $2.49 per share last year.
Wall Street analysts focus on ongoing operations, which strips out the insurance windfall, and by that measure the railroad beat the average estimate reported by FactSet Research by 3 cents per share.
The railroad’s revenue was essentially flat at just under $3 billion, but it was able to continue cutting expenses as part of its larger effort to get more efficient even as it dealt with roughly $35 million of winter storm related costs.
Norfolk Southern CEO Mark George said the railroad overcame disruptive winter weather during the first three months of the year to improve service and efficiency. The railroad also delivered about 1% more shipments in the quarter because consistent service is helping it win new business. Norfolk Southern’s main competitor in the East, CSX railroad, posted a 1% decline in volume during the quarter as two major construction projects and the storms disrupted its network, so it appears that some shipments shifted between the two railroads.
“Our service performance is increasing our customers’ confidence in Norfolk Southern and allowing us to gain share,” George said in a statement.
He still predicts that Norfolk Southern will generate another $150 million of productivity improvements this year while seeing revenue grow roughly 3% although the overall economy could derail that if it takes a downturn after President Donald Trump’s tariffs all take effect.
George said the railroad is hearing fears about the possibility for a recession later this year so Norfolk Southern is keeping a close eye on volume, but shippers haven’t started to cut shipments yet.
“There’s no way to predict where we go right now,” George said. “But we haven’t seen negative trends yet that alarm us.”
The Atlanta-based railroad is one of the biggest in the nation with tracks throughout the Eastern United States.
A year ago, Norfolk Southern was also in the midst of a fight with an outside investor that wanted to fire management and overhaul the railroad’s operations. That investor, Ancora Holdings, won three board seats, and Norfolk Southern later changed CEOs after the board learned that former CEO Alan Shaw had an inappropriate relationship with a subordinate.
Shares of the company rose about 3% in early trading.