Norfolk Southern Q4 Profit Down 12% Amid Merger Costs

Norfolk Southern’s Q4 profit plunged 12% to $644M due to merger costs and a weak freight market, impacting operational efficiency.

Norfolk Southern Q4 Profit Down 12% Amid Merger Costs
January 29, 2026 10:39 pm
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🛑 Key Takeaways:
  • Norfolk Southern’s Q4 2025 net income fell 12% to $644 million, pressured by costs from its proposed Union Pacific merger and economic headwinds.
  • The railway’s Operating Ratio (OR), a key efficiency metric, deteriorated to 68.5% from 62.6% in the prior-year quarter.
  • The results underscore the financial strain of the $85 billion transcontinental merger effort as the deal undergoes regulatory review amid a weak freight market.

ATLANTA – Norfolk Southern (NYSE: NSC) reported a 12% year-over-year decline in fourth-quarter 2025 net income to $644 million, as costs related to its proposed merger with Union Pacific and soft freight demand eroded profitability. The Class I railroad’s operating revenue dipped 2% to $2.97 billion, with diluted earnings per share falling 11% to $2.87.

MetricQ4 2025 ResultQ4 2024 Result% Change
Operating Revenue$2.97 billion$3.03 billion-2%
Net Income$644 million$732 million-12%
Diluted EPS$2.87$3.22-11%
Income from Railway Operations$937 million$1.13 billion-17%
Operating Ratio (OR)68.5%62.6%+590 bps
Adjusted Diluted EPS$3.22N/AN/A

Financial Performance Deep Dive

The railroad’s operational efficiency worsened significantly in the quarter. The reported operating ratio increased by 590 basis points to 68.5%. This indicates a higher percentage of revenue was consumed by operating costs. The company’s income from railway operations fell 17% to $937 million.

The Q4 2025 results include a net gain of $85 million from a large land sale. This partially offset operational pressures. By comparison, Q4 2024 results included a smaller $53 million gain from railway line sales. When excluding merger-related expenses and the effects of a 2023 derailment, Norfolk Southern’s adjusted income from railway operations was $1 billion. The adjusted OR was a more favorable 65.3%, with adjusted diluted EPS at $3.22.

Market Impact Analysis

The earnings report highlights the financial headwinds facing Norfolk Southern as it pursues an $85 billion merger with Union Pacific to create a transcontinental network. The costs associated with the deal are directly impacting current profitability. The decline in core operational metrics comes as U.S. regulators review the proposal. Union Pacific also recently posted downbeat quarterly results, signaling broad macroeconomic strain across the rail sector.

Despite the profit decline, Norfolk Southern signaled confidence in its long-term stability by declaring a quarterly dividend of $1.35 per share. This marks the 174th consecutive quarterly dividend paid by the company since its formation in 1982.

📅 Originally Published: December 2025
For context on this project’s history, here’s a look at the initial announcement.

➤ Read More: RBP Enhances Freight with Stadler Euro9000 Locomotive in Germany


FAQ: Quick Facts

Why did Norfolk Southern’s profit decline in Q4 2025?

Profits fell primarily due to costs associated with its proposed merger with Union Pacific and general economic uncertainty impacting freight demand.

What is the Operating Ratio and why is it important?

The Operating Ratio (OR) measures operating expenses as a percentage of revenue; a lower number is better. NS’s reported OR increased from 62.6% to 68.5%, indicating a decline in operational efficiency.

What were the adjusted earnings for the quarter?

Excluding merger costs and other special items, Norfolk Southern reported an adjusted diluted EPS of $3.22 and an adjusted Operating Ratio of 65.3%.