OMAHA, Neb. – Harsh winter weather slowed CSX railroad and contributed to a 14 per cent drop in first-quarter profit, even as freight volume grew modestly.
On Tuesday, the railroad based in Jacksonville, Fla., reported net income of $398 million, or 40 cents per share, in the quarter ending March 31. That’s down from $462 million, or 45 cents per share, a year ago.
CSX said weather in early 2014 cost it 8 to 9 cents per share in increased expenses and lost revenue. Michael Ward, the railroad’s president, CEO and chairman, praised the way employees responded.
“Thanks to the hard work of our employees, service levels are gradually recovering, and we are capitalizing on an economy that continues to show positive momentum,” Ward said.
The railroad’s quarterly revenue grew 2 per cent to $3.01 billion as it hauled 3 per cent more freight. Increases in intermodal and merchandise shipments offset the 9 per cent drop in coal revenue.
Over the past several years, relatively weak coal demand has hurt railroad profits because low natural gas prices have prompted many utilities to switch from coal to gas. The tepid economy recovery has also hurt industrial demand for coal.
Analysts surveyed by FactSet expected CSX to report earnings per share of 39 cents on $2.99 billion revenue.
CSX Corp. said it expects modest profit growth in 2014. The railroad is still predicting double-digit profit growth in 2015 and beyond.
Edward Jones analyst Logan Purk said he expects investors will hear a lot about the weather from railroads and other transportation companies. CSX is the first major freight railroad to report results.
Purk said the weather factor can make it difficult for investors to judge how well railroads performed but CSX’s results were encouraging overall.
“If it was a normal weather quarter, it would have been a fairly blowout quarter,” Purk said.
The number of carloads of chemicals, crops, lumber, coal, grain and containers of imported goods that railroads carry offers clues about the health of the broader economy.
The modest increase in CSX’s shipping volume supports the idea the economy continues to grow at a slow pace.
CSX Corp. operates more than 21,000 miles of track in 23 Eastern states and two Canadian provinces.
Union Pacific railroad is scheduled to release its quarterly earnings report Thursday, and Norfolk Southern will report earnings next Wednesday.
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