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UPDATE 1-Freight volumes, U.S. tax law boost Norfolk Southern profit

(Adds revenue, CEO comment)

Jan 24 (Reuters) - Norfolk Southern Corp, the fourth-largest U.S. railroad by revenue, reported on Wednesday an adjusted fourth-quarter profit that beat Wall Street's estimates on growth in commodity volumes.

The Norfolk, Virginia-based carrier also benefited mightily from the new tax law, posting quarterly net income of $3.97 billion, or $13.79 per share, up from $416 million, or $1.42 per share, a year earlier.

After adjustments for one-time items, the railroad earned $1.69 per share, versus the $1.57 analysts expected.

Without the impact of tax reform, fourth-quarter 2017 adjusted profit was $486 million, the railroad said.

Railway operating revenue increased 7 percent to $2.7 billion from a year earlier, surpassing the $2.65 billion expected by analysts.

Volumes of the freight it carried were up 5 percent on growth in coal, merchandise, and intermodal - or containers that transfer from ship, to truck, to rail.

"Norfolk Southern is open for growth, and we are optimistic as we head into 2018 that the current economic environment will provide an opportunity for continuing growth," Chief Executive Jim Squires said in a statement accompanying its financial results.

The railroad's operating ratio, a closely watched measure of operating costs as a percentage of revenue, was 67.4 percent, a 150 basis point improvement over the prior year. A lower operating ratio shows improvement in profitability.

(Reporting by Eric M. Johnson in Seattle; Editing by Steve Orlofsky)