NORFOLK SOUTHERN CORP recently released its 10-Q report. Norfolk Southern Corporation and its subsidiaries haul raw materials, intermediate products, and finished goods across the United States by rail. Its traffic includes agricultural products, chemicals, metals, construction materials, automotive freight, coal, and intermodal shipments, and it also moves overseas freight through Atlantic and Gulf Coast ports; the company is headquartered in Atlanta and was incorporated in 1980.
In Item 2, management said the quarter was shaped by stronger volume, higher fuel prices, merger-related costs, and the absence of insurance recoveries tied to the Eastern Ohio incident. Norfolk Southern also disclosed that on July 28, 2025, it signed a merger agreement with Union Pacific, describing the deal as a step toward a transcontinental railroad.
Second-quarter railway operating revenues rose 11% to $3.465 billion from $3.110 billion a year earlier, while first-half revenues increased 6% to $6.463 billion from $6.103 billion. Railway operating expenses climbed 21% in the quarter to $2.341 billion and 18% in the first half to $4.462 billion, pushing income from railway operations down 4% in the quarter to $1.124 billion and 14% in the first half to $2.001 billion.
Net income fell 4% in the quarter to $734 million and 16% in the first six months to $1.281 billion. Diluted earnings per share declined to $3.26 from $3.41 in the quarter and to $5.69 from $6.72 in the first half. The operating ratio worsened to 67.6% from 62.2% in the quarter and to 69.0% from 62.0% in the first half.
On an adjusted basis, second-quarter net income was $793 million, or $3.52 per diluted share, up from $741 million, or $3.29, a year earlier. Adjusted first-half net income was $1.390 billion, or $6.17 per share, versus $1.350 billion, or $5.97 per share.
By commodity, second-quarter merchandise revenue rose to $2.133 billion from $1.972 billion, intermodal revenue increased to $908 million from $743 million, and coal revenue climbed to $424 million from $395 million. Within merchandise, chemicals was the strongest category, with revenue up 18% to $646 million, while agriculture, forest and consumer products rose 4% to $673 million, metals and construction increased 5% to $480 million, and automotive edged up 3% to $334 million.
Intermodal units increased 5% in the quarter to 1.064 million, led by domestic volume of 668,900 units, up 11%, while international volume slipped 3% to 395,200 units. Coal tonnage rose 4% to 21.187 million tons, with export coal up 25% to 9.349 million tons, offset partly by a 15% drop in domestic metallurgical coal to 2.333 million tons.
Fuel surcharge revenue was a major driver of the top line. Norfolk Southern said about 95% of its revenue base is covered by contracts with negotiated fuel surcharges, and surcharge revenue totaled $415 million in the quarter versus $203 million a year earlier; for the first half, it was $625 million versus $405 million.
On the expense side, fuel was the largest pressure point, rising to $405 million in the quarter from $219 million and to $661 million in the first half from $463 million. Compensation and benefits increased to $744 million from $692 million in the quarter, purchased services rose to $435 million from $409 million, equipment rents to $115 million from $111 million, depreciation to $358 million from $346 million, and materials to $113 million from $98 million. Following these announcements, the company's shares moved 4.54%, and are now trading at a price of $345.9575. Check out the company's full 10-Q submission here.
