(The Associated Press circulated the following article on April 28.)
JACKSONVILLE, Fla. — Railroad companies CSX Corp. and Burlington Northern Santa Fe Corp. both reported large increases in first-quarter profits Thursday pushed by higher demands for coal and merchandise transportation.
CSX, based in Jacksonville, Fla., reported first quarter income jumped to $579 million, or $2.56 per share, from $30 million, or 14 cents, in the year-ago period. Earnings included an after-tax gain of $425 million, or $1.88 per share, from the sale of its international terminals business.
Earnings from continuing operations in the 2005 quarter were 68 cents per share, compared with 13 cents per share a year ago. The prior year results reflect 14 cents per share in restructuring costs. On average, analysts surveyed by Thomson Financial were looking for a profit of 45 cents per share.
CSX, the largest railroad in the eastern part of the country, said its core surface transportation business saw revenue grow 11 percent to $2.1 billion from $1.9 billion, led by strength in shipments of coal and merchandise, which grew 20 percent and 8 percent, respectively.
”CSX continued on the path of consistent, continuos improvement producing year-over-year growth in core earnings for the fifth consecutive quarter,” Michael Ward, CSX chairman, president and chief executive officer, said a news release.
Burlington Northern Santa Fe said Thursday that its profit also rose sharply in the first quarter, lifted by strong gains in revenue across all of its divisions.
The nation’s second largest railroad company, based in Fort Worth, Texas, said quarterly income jumped 66 percent to $321 million, or 83 cents per share, from $193 million, or 52 cents, in the year-ago period. On average, analysts polled by Thomson Financial were looking for income of 73 cents per share.
Operating revenue totaled $2.98 billion for the quarter, an increase of 20 percent from $2.49 billion a year earlier. The company said volume grew 8.6 percent to reach 145.8 billion revenue ton miles, as revenue per thousand ton miles climbed to $19.88 from $18.23 last year.
By segment, revenue from shipping coal and industrial and agricultural products swelled 18 percent to $2.9 billion, while consumer-product shipments expanded 22 percent to $1.13 billion, Burlington added.
Both rail companies predicted rosy futures.
”We continue to see unprecedented demand for rail growth,” Matthew K. Rose, Burlington Northern chairman, president and chief executive officer, said in a conference call Thursday.
Ward, the CSX chief, said the growth in the economy, restrictions in the trucking industry and record car loadings show a strong future in the growth of rail transportation.
James J. Valentine, an analyst with Morgan Stanley, complimented CSX on its ”strong first quarter results, led by good cost control at the railroad and slightly better pricing across all of its transportation divisions.”
Thomas Wadewitz, an analyst with Bear Stearns, mentioned a brief labor strike Wednesday by 8,000 conductors who are members of the United Transportation Union on the northern segment of Burlington Northern. The company quickly obtained a court order forcing them back to work.
”Even if the UTU attempts another strike, our sense is that it is unlikely to be sustained. As a result, we see little risk to BNI stock from this apparent issue with the UTU,” Wadewitz wrote in a research note.
Shares of Burlington closed Thursday up 1 cent at $47.58, while CSX shares rose 48 cents, or 1.2 percent, to $39.83, both on the New York Stock Exchange. Burlington shares have been trading at a 52-week range of $31.69 to $56.47, and CSX stock has been trading between $29.90 and $43.54.
CSX Corp. provides rail, intermodal and rail-to-truck services. Its principal company, CSX Transportation Inc., operates a 21,000-mile rail network linking commercial markets in 23 states, the District of Columbia and two Canadian Provinces.
BNSF Co. operates 32,000-mile rail network in 28 states and two Canadian provinces.