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US railroad company Norfolk Southern reported a significant 41% decline in third-quarter profits, heavily impacted by expenses associated with the Eastern Ohio freight train derailment.
Earlier this year, a Norfolk train carrying hazardous materials derailed, prompting a lawsuit by the US Justice Department. The legal action seeks to ensure Norfolk covers all associated cleanup costs and any potential long-term damages. As a consequence, the company bore a $163 million charge this quarter, following substantial hits of $416 million and $387 million in the previous two quarters. Amidst these challenges, the company also contends with decreased consumer demand due to inflationary strains and mounting borrowing expenses, leading to reduced freight volumes and shrinking profits despite attempts to raise prices.
Norfolk’s recent financial statements revealed quarterly earnings from railway operations standing at $756 million, inclusive of the derailment charges. This starkly contrasts the $1.3 billion reported the previous year. Their adjusted profit for the third quarter was pegged at $2.65 per share, down 35% year-over-year, marginally missing analysts’ anticipated $2.69 per share.
Additionally, the firm, connected to all major Atlantic coast container ports and other significant waterways, saw its quarterly railway operating revenue fall by 11%, totaling $2.97 billion for the quarter ending on September 30th.