Union Pacific strikes deal with CN to clear merger opposition
Norfolk Southern on Thursday reported second-quarter revenue of $3.5 billion, an 11% increase from the same period last year, beating Wall Street expectations of $3.37 billion as demand trends improved.
The company’s adjusted earnings came in at $3.52 a share, above the $3.31 analysts polled by FactSet had forecast. Income from railway operations fell 4.3% to $1.12 billion, and earnings on a GAAP basis were $3.26 a share, reflecting one-time costs tied to the company’s pending sale to Union Pacific as well as continued expenses from the February 2023 freight-train derailment in East Palestine, Ohio.
Chief Executive Mark George said the quarterly results exceeded the company’s initial forecast, citing improving demand across key markets. “Our team adapted to a dynamic operating environment with focus and an unwavering commitment to safety,” he said.
Norfolk Southern agreed last July to sell itself to Union Pacific for $71.5 billion, a combination that would create the first transcontinental freight railroad in the United States. The merger remains under regulatory review by the U.S. Surface Transportation Board, which paused its evaluation in May, saying it needed more information to assess the two railroads’ revised application.
On Wednesday, Union Pacific struck a deal with Canadian National Railway, offering the Montreal-based railroad further access in the Midwest in exchange for CN ending its opposition to the merger. The agreement removes one potential obstacle for the transaction, which has also drawn criticism from customers and rival railroads who argue it would reduce competition and push up freight prices.
Shares of Norfolk Southern rose 1.3% to $335.07 in premarket trading Thursday.