OMAHA, Neb. – CSX delivered a 2 per cent profit increase in the third quarter as the railroad operator overcame disappointing coal revenue with volume growth and higher shipping rates.
The results beat Wall Street expectations, and the railroad company slightly increased its outlook for the year.
Its shares rose in after-market trading Tuesday.
All the major freight railroads have been struggling with weak coal demand over the past two years as cheap natural gas prices prompted many utilities to switch fuels. CSX said coal revenue declined 9 per cent in the third quarter to $720 million.
But CSX’s other major freight sectors all improved in the quarter.
Revenue from shipments of intermodal containers that railroads haul from ports grew 8 per cent to $431 million. And revenue from all other merchandise surged 7 per cent to $1.7 billion as industrial and construction related shipments grew.
“I think the economy is getting better and that’s helping the company,” Edward Jones analyst Logan Purk said.
CSX Corp. operates over 21,000 miles of track in 23 Eastern states and two Canadian provinces.
The Jacksonville, Fla.-based railroad said that it earned $463 million, or 46 cents per share. That’s up from $455 million, or 44 cents per share, a year ago.
CSX’s revenue grew 4 per cent to nearly $3 billion as it hauled 3 per cent more carloads of freight and increased some shipping rates.
The railroad’s expenses grew 5 per cent to $2.1 billion in the quarter as CSX’s materials and labour costs grew, but revenue grew enough to offset that.
Analysts surveyed by FactSet expected CSX to report earnings of 42 cents per share on revenue of $2.95 billion.
“The third-quarter performance is an ongoing reflection of the company’s ability to capitalize on the modest improvement in the economy with a relentless focus on customer service and asset efficiency,” said Michael Ward, chairman, president and CEO of CSX.
CSX says it expects slightly higher 2013 earnings per share than in 2012. Previously, the railroad predicted relatively flat earnings.
CSX is the first major freight railroad to release quarterly earnings. Union Pacific Corp. will release its third-quarter results on Thursday, and Norfolk Southern Corp. will follow next Wednesday.
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CSX Corp.: www.csx.com