Norfolk Southern Lifts Q4 Earnings Despite Weak Freight

Key Moments

Norfolk Southern reported a rise in adjusted fourth-quarter profit to $3.22 per share from $3.04 per share a year earlier.
Fourth-quarter railway operating revenue declined 2% to $3 billion, while railway volumes fell 4% from a year ago.
The company achieved more than $215 million in cost savings in the fourth quarter, even as its adjusted operating ratio deteriorated by 40 basis points to 65.3%.

Merger Review Sets Backdrop for Quarterly Results

Jan 29 (Reuters) – Norfolk Southern reported higher fourth-quarter profit on Thursday, supported by cost controls in the face of uneven freight demand and ongoing macroeconomic pressure.

The quarterly update followed a recent decision by the U.S. Surface Transportation Board earlier this month to return Union Pacific’s proposed $85 billion merger with Norfolk Southern for revision.

Regulators at the Surface Transportation Board described the December merger filing as incomplete. However, Union Pacific CEO Jim Vena said the feedback was routine and reiterated that the transaction remains on schedule to close in the first half of 2027.

Competitive Response Weighs on Intermodal Activity

In October, Norfolk Southern said it anticipated future revenue volatility tied to “competitor response” to the proposed merger. The company noted that the announcement had already contributed to a 2% decline in third-quarter intermodal volumes. Intermodal shipping involves the movement of goods using two or more modes of transportation.

Cost Controls Support Profitability

Norfolk Southern highlighted significant cost reductions in the latest period. In the fourth quarter, the company realized more than $215 million in savings, driven primarily by productivity improvements, CEO Mark George said in the company’s earnings statement on Thursday.

“As we move through 2026, the demand environment remains unclear,” he added.

Fourth-Quarter Financial Performance

Railway operating revenue for the fourth quarter decreased 2% to $3 billion compared with the same period a year earlier. Railway volumes were down 4% from a year ago, reflecting the challenging demand backdrop.

Atlanta, Georgia-based Norfolk Southern reported adjusted earnings of $3.22 per share for the quarter, up from $3.04 per share a year earlier.

On an adjusted basis, the company’s operating ratio – a key gauge of efficiency – was 65.3% for the quarter, representing a 40-basis-point deterioration from a year earlier.

Key Q4 Metrics

Metric	Fourth Quarter (Current)	Fourth Quarter (Year-Ago)
Railway operating revenue	$3 billion	$3.06 billion (implied by 2% decline)
Railway volumes	-4% vs. year ago	Baseline
Adjusted earnings per share	$3.22	$3.04
Adjusted operating ratio	65.3%	64.9% (40-basis-point better prior period)
Fourth-quarter cost savings	More than $215 million	Not stated