(Adds quotes from analyst call, previous operating ratio, CFO retirement, stock action)
April 26 (Reuters) - Norfolk Southern Corp, the No. 4 U.S. railroad, reported a higher first-quarter net profit on Wednesday, as income from railway operations rose and as it recorded a lower effective income tax rate.
The railroad saw an operating ratio, a measure of operating expenses as a percentage of revenues, of 70.0, which it called a record for the quarter. The year-ago ratio was 70.1.
"We expect to see year-over-year improvement in our operating ratio in each of the remaining quarters of this year, as compared to 2016," said Chief Financial Officer Marta Stewart on a conference call with analysts.
Chief Executive Officer Jim Squires said on the call that the railroad is targeting an operating ratio below 65 by 2020. The lower an operating ratio, the more efficient the railroad.
Norfolk Southern has promised to deliver $650 million in productivity savings by 2020, including a cut of $100 million in costs in 2017.
Coal freight revenue jumped 20 percent to $420 million from $349 million. The major U.S. railroads have struggled with a slide in coal volumes as utilities have switched to burning cheaper natural gas.
Separately, the company said Stewart plans to retire, effective Aug. 1, and has started a search to find her replacement.
The Norfolk, Virginia-based company reported first-quarter net income of $433 million, or $1.48 per share, up 12 percent from $387 million, or $1.29, a year earlier. Analysts looked for $1.33, according to Thomson Reuters I/B/E/S.
Income from railway operations rose 7 percent to $773 million from $723 million in the year-ago period.
The company said its effective tax rate fell to 33.9 percent in the quarter from 35.5 percent a year ago.
Shares dipped 0.6 percent to $116.10 in early trading. (Reporting by Luciana Lopez in New York; Editing by Jeffrey Benkoe)