CSX Jumps as Freight Drop Softened by Cost Cuts, Price Gainsby
Shares rise most in about three months after earnings report
Railroad to reduce expenses 25% more than initially planned
CSX Corp. advanced the most in three months after the railroad raised prices to help offset a drop in cargo and said it would cut costs 25 percent more than previously planned.
The largest railroad in the eastern U.S. climbed 4.2 percent to $26.04 at 12:42 p.m. in New York after advancing as much as 5.3 percent, the largest intraday gain in about three months.
Even with a 5 percent drop in freight volume, the railroad was able to increase first-quarter prices by 3.1 percent, based on charges for similar cargoes on comparable routes. CSX said it would reduce costs by $250 million this year, compared with a previous target of $200 million.
“I would love to do more than $250 million, if we can find a way to do it,” Chief Executive Officer Mike Ward said in a telephone interview. “We’re turning over every rock. Nothing is off the table.”
U.S. railroads are cutting jobs, parking locomotives and closing some facilities as cargo volumes fall due to weaker demand to haul coal, oil, metals and other commodities. Freight traffic for large U.S. carriers fell 6.5 percent in the first quarter, led by a 33 percent drop in coal carloads, according to the Association of American Railroads.
CSX’s first-quarter earnings dropped to 37 cents a share from 45 cents a year earlier, the company said Tuesday after the close of trading. That met the average of 25 forecasts compiled by Bloomberg. Sales fell 14 percent to $2.62 billion.
Improving service paved the way for CSX to raise prices in almost all its markets except export coal, Ward said. Trains leaving their origination on time jumped to 81 percent in the first quarter from 50 percent and train speed rose to an average of 21.1 miles per hour from 20.2 mph a year earlier.
“We’re working to serve the customers well to move what business they do have and allow us to price for some of the value we’re creating,” Ward said.