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Norfolk Southern Corp. reported fourth-quarter 2016 net income rose 15 percent to $416 million, or $1.42 diluted earnings share, from $361 million, or $1.20 diluted earnings per share, in the same period a year ago. Railway operating revenue during the quarter declined 1 percent to $2.5 billion compared with Q4 2015, reflecting lower merchandise and coal traffic, as well as reduced fuel surcharges.Those declines were offset in part by intermodal growth that eclipsed effects from the restructuring of the Triple Crown unit in 2015, according to an NS press release.The Class I posted a Q4 2016 operating ratio of 69.4 percent compared with 74.5 percent in Q4 2015.Also in fourth-quarter 2016, NS reported general merchandise revenue declined 1 percent to $1.5 billion compared with a year ago. Volume was down 3 percent overall, as growth in steel and agriculture was offset by declines in energy, vehicles, paper and forest products. For full-year 2016, NS' net income increased 7 percent to $1.7 billion over full-year 2015. Diluted earnings per share jumped 10 percent to $5.62 per diluted share compared with a year ago.The company's railway operating revenue for the year fell 6 percent to $9.9 billion compared with a year ago. NS cited a 3 percent volume decline due to cuts in energy-related markets, the Triple Crown restructuring and reduced fuel surcharges for the reasons behind the operating revenue decrease in 2016.Results for 2015 included restructuring expenses that lowered fourth-quarter net income by $31 million, or 10 cents per diluted share, and lowered 2015's net income by $58 million, or 19 cents per diluted share for the year, NS officials said.The railroad's operating ratio for all of 2016 improved to 68.9 percent from an operating ratio of 72.6 percent in 2015."2016 was a pivotal year as Norfolk Southern began implementing its new strategic plan," said NS Chairman, President and Chief Executive Officer James Squires. "We delivered $250 million of productivity savings and recorded our best ever operating ratio, notwithstanding challenging business conditions."NS improved customer service in 2016 "while positioning the company for further growth in 2017 and beyond," Squires added."We are poised to continue building on our success and deliver an additional $100 million of productivity savings in 2017 on the way to our goal of $650 million of annual savings by 2020," he said.NS also announced today that it plans to spend $1.9 billion this year on capital expenditures to "maintain rail network, enhance service, improve operational efficiency, and support growth opportunities," according to the press release. The Class I's 2016 capex budget also was $1.9 billion.
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