Norfolk Southern results complicated by derailment insurance payments, proxy fight and productivity

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Norfolk Southern got a boost during the second quarter from insurance payments related to last year's disastrous East Palestine derailment, but it also made progress in reducing its expenses and getting more efficient

Norfolk Southern got a boost during the second quarter from insurance payments related to last year's disastrous East Palestine derailment, but it also made progress in reducing its expenses and getting more efficient.

The Atlanta-based railroad said it earned $737 million, or $3.25 per share, in the quarter, but there were several unusual factors influencing the results. And last year's $356 million profit, or $1.56 per share, was heavily weighed down by costs related to the derailment near the Ohio-Pennsylvania border.

But CEO Alan Shaw is most proud of the $250 million in productivity and safety gains the railroad has made this year. Norfolk Southern also hauled 5% more freight during the quarter thanks to the efficiency and new business it was able to attract.

“I'm really encouraged by our progress and I’m really confident in our future,” Shaw said. “We did everything we said we were going to do.”

The $156 million in insurance payments the railroad received as it recovered some of the more than $1.7 billion it has spent in response to the February 2023 derailment in eastern Ohio more than offset the $91 million in costs this quarter. That resulted in a $65 million net boost to earnings. Much of the derailment costs, including the $600 million class action settlement the railroad agreed to this spring, will likely eventually be covered by the railroad's insurance.

Further complicating the financial picture is the fact that Norfolk Southern spent $22 million in the quarter to fight back against investor