(The following story by Gregory Richards appeared on The Times-Union website on April 29.)
JACKSONVILLE, Fla. — CSX Corp.’s first-quarter earnings dropped 70 percent from a year ago, the railroad giant reported Wednesday, but factoring out one-time charges swelled earnings 55 percent on a per share basis.
The company also said it cut about 35 jobs from its Jacksonville headquarters Wednesday as it completed a management restructuring program that has eliminated 900 jobs systemwide since last fall.
CSX had net earnings of $30 million, or 14 cents per share, down from $99 million, or 46 cents per share, in the first quarter of 2003. Last year’s figures include an additional $57 million, or 26 cents per share, from a change in accounting rules.
This year’s first-quarter earnings were lowered by $37 million, or 17 cents per share, because of the cost of reducing the managerial workforce. Excluding the charge, first-quarter earnings were $67 million, or 31 cents per share, beating the average Wall Street estimate of 27 cents per share, according to First Call. But First Call had lowered its estimate since the end of January, when it was 40 cents per share.
Overall, CSX Chairman and Chief Executive Office Michael Ward said he was “very pleased” with the quarter, which brought to eight the number of consecutive quarters of year-over-year revenue growth in its surface transportation division, where the company makes nearly all its money. Surface transportation operating revenue increased 4.5 percent to hit a record $1.92 billion, though operating income slid slightly from $169 million to $151 million because of increased expenses.
“The first quarter marks the first step for us as we work to get back on the path to consistent, continuous improvement,” he said.
A big hurdle to overcome remains the railroad’s performance. Data released by CSX, the country’s third-largest railroad, showed that several key operating statistics — including average train speed and on-time originations — worsened from the first quarter last year.
“We obviously must significantly improve our service,” Ward said. “I’m not satisfied with our numbers, our performance, or our progress. We must reverse those trends.”
CSX is taking steps to address those issues, he said.
A new program is being implemented called the “One Plan,” which will employ consultants MultiModal Applied Systems of Princeton, N.J., to redesign how CSX routes and schedules trains. Ward said the firm has worked with such other railroads as Canadian Pacific and Norfolk Southern, and they “saw improvement in their service and cost structure,” he said.
The One Plan will be put into service beginning this summer, with improvements expected to appear by early 2005, said Tony Ingram, CSX’s newly hired executive vice president and chief operating officer.
Ingram said his top goals are increasing the company’s safety performance and improving train originations. In the first quarter, CSX data showed that only 52.8 percent of trains left on time, a decrease from 63.4 percent during the same period last year.
The company is already seeing the anticipated benefits of improved communication and faster decision-making from its management restructuring initiative, Ward said. Management layers were reduced from 11 to no more than eight.
CSX spokesman Adam Hollingsworth said the company cut 190 employees companywide Wednesday, including 35 in Jacksonville, mostly from CSX’s technology division.
The economic conditions continue to look bright for future revenue gains, company officials said. During the first quarter, the company’s core transportation markets all experienced growth, led by 10 percent increases in coal, coke and iron ore.
CSX’s stock price rose $1.36 in trading Wednesday, closing at $31.73.
The company will hold its annual shareholders meeting Wednesday at the Times-Union Center for the Performing Arts, its first shareholders meeting in Jacksonville.