Norfolk Southern Corp. delivered a 23% improvement in its first-quarter profit as the railroad began implementing a comprehensive plan to cut costs and improve productivity.
The Norfolk, Virginia-based company said it earned $677 million, or $2.51 per share, in the quarter. That's up from $552 million, or $1.93 per share, last year.
The per-share results easily beat the $2.17 average estimate that analysts surveyed by Zacks Investment Research predicted.
"Our first-quarter results reflect the initial steps in the implementation of our new strategic plan that are transforming our company," CEO Jim Squires said.
These are the first quarterly results since Norfolk Southern announced plans in January to follow the rest of the industry in overhauling its operations. CSX and Union Pacific have had great success over the last couple of years by implementing a model that runs trains on a tighter schedule with fewer locomotives and fewer employees.
Citi analyst Christian Wetherbee said the railroad handily beat his profit estimate by 32 cents per share with modest revenue growth and solid cost controls.
Norfolk Southern's revenue grew 5% to $2.84 billion even though the number of shipments it delivered in the quarter was flat. The revenue topped the Wall Street forecast of $2.8 billion.
The railroad is in the process of building a new headquarters in Atlanta. Norfolk Southern operates about 20,000 miles of track in 22 states and operates a locomotive shop in Chattanooga.