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Rail News Home CSX Transportation

7/14/2009



Rail News: CSX Transportation

CSX: Revenue and earnings on downside, but expenses and OR show upside


Today, CSX Corp. held a Webcast/teleconference to review second-quarter financial results, which mirrored those of the first quarter. Earnings and revenue fell sharply because of a double-digit traffic decline — which is affecting all freight railroads — while expenses dropped and the operating ratio improved due to lower fuel prices, increased productivity and the Class I’s ongoing cost-cutting efforts.

Earnings per share from continuing operations of 72 cents declined 24 percent as traffic volume fell 21 percent compared with second-quarter 2008 figures. Coal, intermodal, merchandise and automotive carloads decreased 21 percent, 14 percent, 22 percent and 41 percent, respectively.

Revenue tumbled 25 percent year over year to $2.19 billion. Coal revenue fell 20 percent to $662 million, intermodal revenue dropped 24 percent to $291 million, merchandise revenue tumbled 26 percent to $1.1 billion and automotive revenue plunged 45 percent to $113 million. Analysts had projected revenue of $2.27 billion and earnings of 62 cents per share, according to Thomson Reuters.

“We saw what our customers saw: more tough times,” said CSX Chairman, President and Chief Executive Officer Michael Ward during the teleconference. "While the economy continues to significantly impact our business, there are some signs that we may be seeing the bottom in many markets.”

The Class I continued to show positive signs in the quarter of reducing operating expenses and lowering the operating ratio. Expenses of $1.6 billion fell 27 percent compared with second-quarter 2008’s total primarily because fuel costs plummeted 66 percent to $185 million, materials, supplies and other costs dropped 28 percent to $368 million, and labor/fringe costs fell 11 percent to $654 million as the railroad’s headcount totaled 29,878 at quarter’s end vs. 33,082 a year earlier. CSX’s operating ratio improved 1.9 points to 73.4.

"Even in this difficult business environment, we are still strengthening our operations, optimizing our resources and making the right investments to prepare our network for the future,” said Ward.

Jeff Stagl


Contact Progressive Railroading editorial staff.

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