CSX Profit Climbs 30% as Recovery Boosts Volumes

(Corrects fourth paragraph of story published April 19 to specify trade group’s volume total is for one week only and excludes intermodal freight.)

CSX Corp. (CSX), the third-biggest U.S. railroad, said quarterly profit gained 30 percent as shipping volumes rose because of the economic recovery.

Net income climbed to $395 million, or $1.06 a share, from $305 million, or 78 cents, a year earlier, the Jacksonville, Florida-based company said today in a statement. While that beat the average of $1.04 of 28 analysts’ estimates compiled by Bloomberg, the shares slid 2 percent to $74.50 in late trading.

“Railroads through 2010 have been delivering results well above Street expectations,” Walter Spracklin, an RBC Capital Markets analyst in Toronto who recommends holding CSX, said in a telephone interview. “This I wouldn’t call blowing out the lights. This is modestly better than expected.”

U.S. railroads moved 299,903 carloads excluding intermodal cargo in the last week of the first quarter, 1.9 percent more than a year earlier, according to the Association of American Railroads. CSX said volume increased 7 percent, and sales rose 13 percent to $2.81 billion.

Automotive shipping climbed 20 percent, the biggest gain among CSX’s divisions. Coal shipments, which accounted for 31 percent of the company’s sales last year, advanced 3 percent.

CEO’s View

“We’re continuing to see, quarter after quarter, the markets keep improving,” Chief Executive Officer Michael Ward said in an interview at Bloomberg News’ New York headquarters on April 6. He said at the time that volumes were “running 5 to 7 percent up” from a year earlier.

CSX fell $1.54 to $74.50 at 4:55 p.m. after regular New York Stock Exchange trading following the earnings release. The shares rose 69 cents earlier to push the gain for the year to 18 percent.

Operating costs rose 10 percent in the quarter, paced by a 42 percent jump in fuel spending, CSX said. The operating ratio, a measure of expenses divided by sales, was 72.5 percent, down 210 basis points from a year earlier, CSX said.

CSX reiterated its operating-ratio forecast, saying it will achieve a “high-60s” percentage this year. CSX has predicted it will reduce that ratio to 65 percent by 2015.

Union Pacific Corp. (UNP), the largest U.S. railroad by sales, will report earnings tomorrow at 1 p.m. New York time. Burlington Northern Santa Fe, which is owned by Warren Buffett’s Berkshire Hathaway Inc., is the second-biggest U.S. railroad by 2010 revenue.

(CSX will hold a call for investors at 8:30 a.m. tomorrow at +1-888-327-6279.)

To contact the reporter on this story: Natalie Doss in New York at ndoss@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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