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​Norfolk Southern shares are up after release of results

Norfolk Southern on Thursday reported a surprise 25% profit jump in the first quarter. The first-quarter results demonstrate “significant progress” in the company’s strategic plan, Chief Executive James Squires said. “Our team has been committed to streamlining operations, reducing expenses and maintaining superior customer service levels,” Mr. Squires said.

The company is on track to achieve productivity savings of about $200 million and an operating ratio below 70% in 2016, he said. In the latest quarter, the ratio was 70.1%. The company is aiming for annual productivity savings of more than $650 million and an operating ratio below 65% by 2020.The cost savings are particularly important as Norfolk Southern’s main revenue streams have diminished, according to WSJ.

Coal, as it has in recent quarters, remained a drag on the railroad sector’s results. The amount of coal shipped by rail in the U.S. has fallen due to low demand for the fuel amid mild winter temperatures, low natural gas prices and a weak global export market.

Norfolk Southern said its first-quarter coal revenue dropped 23% to $349 million from the same period a year ago, and its coal volume also fell 23%. The railroad operator said coal is now 15% of its total revenue, down from 29% in the same period a year ago.

Norfolk shares are up 10.2% today, and hopefully the rally will be sustained in next few week