Norfolk Southern Corporation (NS) has reported financial results for the year 2016 and for the fourth quarter 2016. Yearly results included a net income of $1.7 billion, an increase of 7 percent from 2015′s reported net income of $1.6 billion. Diluted earnings per share for the full year were $5.62, up from 2015’s $5.10 per diluted share.
Net income for the 2016 fourth quarter rose to $416 million, an increase of 15 percent compared to $361 million during the same period of 2015. In the fourth quarter of 2016, NS reported $1.42 diluted earnings per share, up by 18 percent over $1.20 diluted earnings per share in last year’s fourth quarter.
James A. Squires, NS chairman, president and CEO, stated that 2016 was a pivotal year for the company, as it began to implement its new strategic plan. “We delivered $250 million of productivity savings and recorded our best ever operating ratio, notwithstanding challenging business conditions.”
For the fourth quarter of 2016, operating revenues, at $2.5 billion, decreased 1 percent when compared to the fourth quarter of 2015.
Income from railway operations in the quarter increased by 19 percent to $761 million, and the company reported a railway operating ratio of 69.4 percent compared to 74.5 percent in the fourth quarter of 2015.
In the fourth quarter, general merchandise revenues were down by 1 percent to $1.5 billion, and general merchandise traffic volume dropped 3 percent compared with the prior year fourth quarter. Intermodal revenues increased to $583 million, up 4 percent compared with the fourth quarter of 2015. Chemical revenues dropped 7 percent to $395 million and coal revenues were down by 7 percent to $403 million.
For the full year of 2016, NS reported railway operating revenues of $9.9 billion, down 6 percent over the full year of 2015, and traffic volume was down by 3 percent due to reductions in energy-related markets and the Triple Crown restructuring, as well as reduced fuel surcharges.
Income from railway operations in 2016 was $3.1 billion, a 7 percent increase compared to 2015. Operating ratio for the year was a record 68.9 percent, a 370 basis point improvement over 2015.
The company also reported a 2 percent decrease in general merchandise revenues, which totaled $6.2 billion for the 2016 full year, and a 2 percent lower traffic volume primarily due to reduced demand in energy markets and lower fuel surcharges.
Intermodal revenues were $2.2 billion, a decrease of 8 percent compared to 2015. Coal revenues for 2016 were $1.5 billion, a drop of 18 percent. This was due to reduced utility volumes and a weak global export market, which lowered total volume by 16 percent.
For 2017, NS plans to invest $1.9 billion to maintain the safety of its rail network, enhance service, improve operational efficiency, and support growth opportunities, which is consistent with Norfolk Southern’s total capital investment of $1.9 billion in 2016.
“With the dedication and support of Norfolk Southern’s talented employees, we improved service for customers while positioning the company for further growth in 2017 and beyond,” added Squires. “We are poised to continue building on our success and deliver an additional $100 million of productivity savings in 2017 on the way to our goal of $650 million of annual savings by 2020. We remain steadfast in our commitment to delivering superior shareholder value through the execution of our strategic plan.”