Norfolk Southern Corp.'s second-quarter profit fell 46% as the railroad hauled 26% less freight because of the coronavirus outbreak's impact on the economy.
The railroad said Wednesday that it earned $392 million, or $1.53 per share, during the quarter. That's down from $722 million, or $2.70 per share, a year ago.
The results beat Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of $1.39 per share.
The railroad handled significantly less freight as most automotive plants were shut down for much of the quarter and other manufacturers produced less as officials imposed restrictions in response to the virus. In addition, coal volume fell 57% as utilities continued to switch away from the fuel.
"Our customers in virtually every segment shipped significantly lower volumes," Norfolk Southern CEO Jim Squires said. "The automotive industry was particularly volatile - experiencing a rapid and almost total shutdown and then a subsequent restart and push to restock inventory all within the same quarter."
Norfolk Southern cut its quarterly expenses 21% to $1.48 billion in response to the slower volume and as part of ongoing reforms. The railroad is in the midst of changing its operations to run on a tighter schedule and move more freight with fewer people.
Edward Jones analyst Jeff Windau said Norfolk Southern controlled its expenses well during the quarter, but it is implementing operational reforms at a slower pace than the other major railroads have, which limits how quickly it can reduce costs.
The railroad revenue declined 29% to $2.09 billion in the period. That topped the $2.06 billion that four analysts surveyed by Zacks predicted.
Norfolk Southern shares have decreased almost 5% since the beginning of the year, while the S&P 500 has stayed nearly flat. The stock has fallen nearly 4% in the last 12 months.
The Norfolk, Virginia-based railroad operates about 19,500 miles of track in 22 states and the District of Columbia, including a locomotive shop, yard office and switchyard in Chattanooga.