Thread: CSX Profits up 24%

APRIL 14, 2010.

CSX Posts Strong Profit Gain

By BOB SECHLER
Associated Press

CSX Corp., the first major U.S. railroad to report first-quarter results, cited the economy's "gradual and steady" gain for a 24% profit rise that topped Wall Street expectations.

The Jacksonville, Fla., railroad operator said its freight volume rose 5% overall and climbed in most categories, compared with the depressed year-earlier period, with big increases in shipments of metals, fertilizers, autos and auto parts.

A 27% increase in metals shipments was driven by "rebounding steel consumption consistent with the ongoing economic recovery," the company said in a statement. But its big coal-transportation business remained weak as volume shrank 13% in the quarter due to high coal stockpiles at U.S. utilities. Last month, CSX said it expects its coal shipments this year to rise a bit despite weak first-quarter trends.

The transport sector is poised for a rebound this year, with freight traffic on U.S. railroads up 2.2% in the quarter, according to figures complied by the Association of American Railroads. Still, traffic remains well off 2008 levels, indicating a slow turnaround is underway.

On Tuesday, CSX posted profit of $306 million, or 78 cents a share, up from $246 million, or 62 cents a share, a year earlier. Year-ago results included an $8 million loss from discontinued operations. Revenue rose 11% to nearly $2.5 billion. Analysts expected a profit of 69 cents a share on revenue of $2.38 billion.

The railroad said "yield management initiatives" such as pricing and productivity gains, helped boost results.

Shares rose 1% in after-hours trading Tuesday after finishing up 40 cents at $53.28 in 4 p.m. composite trading on the New York Stock Exchange.

Separately, RailAmerica Inc., an operator of small rail lines that feed the larger carriers, earlier Tuesday reported that its March carloads rose 8.7% from a year ago, excluding a discontinued line.

Jacksonville, Fla.-based RailAmerica credited much of the March gain to higher shipments of agricultural products, chemicals, metallic ores and metals. Its coal shipments fell.

Write to Bob Sechler at bob.sechler@dowjones.com

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