CSX Transportation reports record earnings as merchandise traffic grows

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JACKSONVILLE, Fla. — CSX Transportation reported record first-quarter financial results on Tuesday as revenue gains, merchandise carload growth, and improved operations overcame flat overall traffic volume.

CSX’s net income rose 20%, to $834 million, as revenue rose 5%, to $3 billion. The railroad reported earnings per share of $1.02, a 31% increase that easily topped Wall Street analyst expectations of 91 cents per share, according to I/B/E/S estimates.

The railroad posted a record first-quarter operating ratio of 59.5%, a 4.2-point improvement over the same period a year ago.

Merchandise traffic was up 3% and coal volume grew 5% in the quarter thanks to increased domestic steelmaking and an export market that, while down slightly from last year, remained strong. Intermodal traffic volume declined 5%, as expected, due to the curtailment of lower-volume domestic intermodal lanes both on and off the CSX system.

The merchandise volume gains are a direct result of the railroad’s improved service, CEO Jim Foote says.

From a revenue standpoint, virtually all CSX commodities showed growth. The only business segments that were down were fertilizers and intermodal, which both declined 5%.

CSX’s key operational metrics all showed improvement in the quarter. Average train speed was up 17%, terminal dwell declined 14% — both setting records — and the number of cars online dropped despite flat volume.

On-time train originations held steady at 81%, but on-time arrivals inched up to 64% from 57% a year ago.

The railroad also showed continued improvement in safety measures. The Federal Railroad Administration personal injury rate was down 32% versus a year ago, while the train accident rate declined by 35%.

CSX has 600 locomotives in storage, with its fleet down 10% compared to a year ago, Chief Financial Officer Frank Lonegro says. Since 2016, CSX has pulled 1,200 locomotives from active service as it hauls more tonnage on longer trains.

The increased use of distributed power and energy management systems produced record fuel efficiency for the quarter, Lonegro says.

About 70 trains per day are now using distributed power, Foote says. That’s more than double the number of trains that were scheduled to use distributed power in December, but Foote says the railroad will continue to expand use of the technology that spreads power through the train.

Despite signs of a slowing economy, CSX expects full-year revenue growth in the low single-digit percentage range, Foote says. Much of the growth will come from merchandise traffic, as intermodal growth may be muted amid lane rationalizations and as coal softens in the second half of the year.

NEWSWIRETrains News Wire

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