East Palestine train derailment has now cost Norfolk Southern $1 billion
An aerial photo made with a drone shows damaged railroad tank cars scattered about as cleanup continues in the aftermath of a Norfolk Southern freight train derailment that has created concern by residents over the release of toxic chemicals in East Palestine
By Chris Isidore, CNN
New York (CNN) — The costs to Norfolk Southern from the February derailment in East Palestine, Ohio, are now approaching $1 billion, the company reported Thursday.
The company disclosed it had taken another $416 million charge against its second-quarter earnings, mostly to cover the estimated ongoing clean-up costs at the derailment site.
That charge came on top of an earlier $387 million charge during the first quarter, bringing total charges for clean-up and compensation to more than $800 million. Those charges are for money already spent, as well as for estimates of future spending.
In addition, CFO Mark George told investors Thursday that the company estimates it lost between $175 million to $200 million in revenue from business that was diverted to trucks or other railroads by Norfolk Southern customers due to the service disruptions caused by the derailment.
The track where the derailment occurred is on a major route for the railroad, carrying freight between Chicago and the eastern United States. George said service problems continue along that stretch of track.
“So we talk about probably $40 million to $45 million here in the second quarter of kind of poor service related costs, and that will start to unwind here,” he told investors.
Overall the company reported it made $576 million in the second quarter after taking the charge for the derailment, so the derailment charge reduced earnings by more than 40%. Even without those costs, the company would have fallen short of Wall Street expectations for second-quarter earnings.
Analysts surveyed by Refinitiv had forecast the company would make $1.1 billion in the quarter, excluding any charge for the derailment, or about $100 million more than it made on that basis. Revenue of $3 billion in the quarter was also $100 million short of forecasts.
Shares of Norfolk Southern (NSC) were little changed in Thursday trading following the report. Shares are down about 5% since the derailment.
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