(Reuters) - Norfolk Southern Corp shares soared to a record high on Wednesday after the fourth-largest U.S. railroad’s quarterly profit topped Wall Street’s forecast and executives said they planned to continue raising prices and cutting costs.
Shares in the Norfolk, Virginia-based company jumped 4.9 percent to hit an all-time high of $211.46 on Wednesday.
The first-quarter profit increased 22.6 percent to $677 million, or $2.51 per share, versus last year - significantly higher than analysts’ average forecast of $2.18 per share, according to IBES data from Refinitiv.
Norfolk Southern plans to “test the limits of market-based pricing,” while reducing expenses by running fewer, longer trains, shedding unproductive assets and having 500 fewer employees this year than last, executives said on a conference call with analysts.
First-quarter operating revenue grew 4.5 percent to more than $2.8 billion, while continued workforce reductions helped drive expenses down 0.4 percent.
Operating expenses as a percentage of revenue fell 330 basis points to 66 percent. A lower operating ratio means more efficiency and higher profitability.
Norfolk Southern serves every major container port in the eastern United States. It had limited exposure to the first quarter’s severe cold and devastating flooding that forced the largest U.S. railroads, Union Pacific Corp and BNSF, to route trains away from hard-hit Midwestern states.
Reporting by Lisa Baertlein in Los Angeles; Editing by Jonathan Oatis and Alistair Bell