(Reuters) – U.S. railroad operator Norfolk Southern’s third-quarter profit slumped 41% on Wednesday as the company took another hefty charge related to the Eastern Ohio freight train derailment.
The derailment of one of its freight trains carrying hazardous materials in February led to a lawsuit by the U.S. Justice Department seeking to ensure that the company paid the full cost of the cleanup and any future long-term impact.
The company took a $163 million hit in the quarter following a $416 million charge on its quarterly statement in the second quarter and a $387 million charge in the first.
To add to its worries, inflationary pressures and higher borrowing costs have reduced consumer demand for goods, driving down freight volume hauled by rail and contracting profits despite price hikes.
Norfolk reported quarterly income from railway operations of$756 million, including the derailment charge, compared to $1.3 billion earned last year.
It posted third-quarter adjusted profit of $2.65 per share, down 35% from last year and compared with analysts’ average estimate of $2.69 per share, according to LSEG data.
Norfolk, which has connections to every major container port on the Atlantic coast as well as the Gulf of Mexico and Great Lakes, said its quarterly railway operating revenue dropped 11% to $2.97 billion in the quarter ended Sept. 30.
Analysts on average had expected a revenue of $2.95 billion.
The company’s quarterly results were in contrast with that of peer Union Pacific, which reported profit above estimates last Thursday.
(Reporting by Ananta Agarwal and Mehr Bedi in Bengaluru; Editing by Arun Koyyur)
