(Reuters circulated the following article on July 18.)
CHICAGO — U.S. railroad CSX Corp. said on Tuesday its profit rose in the latest quarter, beating market expectations as prices and volumes increased and the company received insurance payouts for damage caused by Hurricane Katrina.
CSX’s earnings were also boosted by tax benefits.
The company reported a second-quarter profit of $390 million, or $1.66 a share, compared with $165 million, or 73 cents a share, last year.
CSX said that insurance payments totaled $126 million. Large sections of the company’s network were destroyed by the hurricane at the end of August 2005.
Without the impact of those payments, the company reported net earnings of $1.16 a share.
Analysts, on average, expected the Jacksonville, Florida-based company to report a profit of $1.15 a share, according to Reuters Estimates.
The company said the results were also boosted by improved productivity and a strong pricing environment.
Like all U.S. railroads, CSX has benefited from rising volumes driven by soaring U.S. imports and a growing demand for coal for power plants instead of increasingly expensive natural gas.
CSX also announced a two-for-one stock split and a 10 cent dividend on the post-split shares, which the company said was a 54 percent increase. Furthermore, the company reported that its board had authorized a $500 million share buyback program which CSX intends to complete over the next 12 months.
“We are confident in our ability to achieve double digit growth in operating income, earnings and free cash flow over the next five years,” said chief executive Michael Ward.
Excluding those insurance payments, CSX reported second-quarter operating income of $519 million, compared with $422 million a year ago.
The $126 million was equivalent to earnings per share of 33 cents, while the tax benefits boosted earnings per share by a further 17 cents.
Excluding a debt repurchase that was partly offset by tax benefits, the company’s 2005 second-quarter net profit would have been 96 cents a share.