Norfolk Southern Corp.’s profit took a hit in the first quarter on a charge related to the derailment in East Palestine, Ohio, that dumped chemicals on the small town and caused a nationwide public relations storm, including Congressional hearings.
(Bloomberg) — Norfolk Southern Corp.’s profit took a hit in the first quarter on a charge related to the derailment in East Palestine, Ohio, that dumped chemicals on the small town and caused a nationwide public relations storm, including Congressional hearings.
The railroad company posted a charge of $387 million stemming from the accident that doesn’t include any amount covered by insurance, which would come at a future date, the Atlanta-based railroad said Wednesday in a statement. That shaved $1.28 off its earnings per share, which fell by 89 cents compared to a year ago.
“From the beginning, we have been guided by one principle: We are going to do whatever it takes to make it right for East Palestine and the surrounding areas,” Chief Executive Officer Alan Shaw said in the statement. “We are making progress every day and I’m proud of our people.”
Shares fell less than 1% as of 9:42 a.m. in New York. For the year through Tuesday, Norfolk Southern had dropped 16% while the S&P 500 Index has gained 6%.
Besides cleaning waterways and removing contaminated soil, Norfolk Southern has pledged to set up a long-term medical compensation fund and even provide protection for lost property value for home sellers. Shaw told analysts on a conference call that track repairs in the area should be completed by early June.
So far, the company has spent $55 million on the clean-up effort and other derailment-related costs, Chief Financial Officer Mark George said on the call.
Norfolk Southern said adjusted earnings per share came to $3.32, which beat the analyst consensus estimate compiled by Bloomberg for $3.15. They had cut their estimates by an average of 8 cents after the Feb. 3 derailment. Revenue was $3.1 billion, which matched analysts’ expectations.
The accident, which occurred on a mainline to Chicago, crimped some volume as trains were slowed through East Palestine to allow clean up work. Shipments of containerized freight dropped while autos and grain carloads gained.
(Updates with opening shares in fourth paragraph; Adds comments from conference call.)
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