Norfolk Southern CEO Optimistic About 2025

(Gene J. Puskar/Associated Press)

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Norfolk Southern’s solid fourth quarter — combined with the optimism the railroad is hearing from their customers and support they’re getting from Washington D.C. — has the CEO feeling optimistic about 2025.

The railroad, based in Atlanta, earned $733 million, or $3.23 per share, in the fourth quarter. That’s up from $527 million, $2.32, the prior year, helped by a couple of one-time items whereas the same quarter last year was weighed down by hefty derailment cleanup costs. The insurance payments Norfolk Southern is collecting during the fourth quarter related to the disastrous East Palestine, Ohio, derailment in 2023 and ensuing cleanup provided a $32 million boost, and some sales of rail lines added another $40 million to the bottom line.

Without those unusual items, the railroad would have earned $688 million, $3.04. That easily exceeded the $2.94 that the analysts surveyed by FactSet Research were predicting.

CEO Mark George said regulators from the Federal Railroad Administration, Surface Transportation Board and National Transportation Safety Board and members of Congress were all positive in recent meetings last week.

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George 

And it appears that the Trump administration and the Republican-controlled Congress could ease restrictions on the industry instead of continuing to push for the changes President Joe Biden’s Transportation Department had recommended after the 2023 derailment near the Ohio-Pennsylvania border.

“Everyone recognizes that we move the American economy. So we’re an integral, vital part of moving the American economy,” George said. “So they want to be supportive. So those are the messages we were receiving. It feels good and it’s different.”

All the major railroads that have reported earnings this month have said they expect the FRA to now be more likely to approve waivers from regulations the industry has been seeking for years to use automated inspection technology to replace some human inspections. Rail unions have opposed those changes and argued that the new technology should supplement — not replace — human inspections.

Norfolk Southern said the East Palestine derailment is now expected to cost nearly $2.2 billion total with about half of that related to legal costs and settlements like the $600 million class-action one. Insurance is expected to cover at least $751 million of that — leaving only a $1.4 billion impact on the railroad’s finances. But only about half of that has been paid out so far.

Norfolk Southern started off the fourth quarter by recovering from Hurricanes Helene and Milton in the Southeast. That hurt some of the railroad’s service metrics during the quarter, but George said he’s proud of the way the railroad responded to the storms and confident that Norfolk Southern is getting more efficient.

Even with that disruption the railroad hauled 3% more freight in the fourth quarter. But its revenue slipped 2% to $3.02 billion as the lower fuel prices reduced its surcharge revenue. The mix of shipments the railroad hauled also shifted to a less-profitable mix with more deliveries of shipping containers filled with assorted goods. That was still slightly ahead of the $3.015 billion that Wall Street predicted.

The railroad predicts its revenue will grow 3% in 2025 and its profit margin will improve as it records another $150 million of productivity savings on top of a nearly $300 million improvement last year.

Norfolk Southern is one of the nation’s largest railroads with tracks crossing 22 states in the Eastern United States.