(The following report by Ruthie Ackerman appeared at Forbes.com on January 22.)
NEW YORK — Despite higher fuel prices, railroad operator CSX reported a better than expected 5% rise in fourth-quarter profit on strong sales growth and productivity improvements.
CSX logged net earnings of $365 million, or 86 cents per share, for the three months ended Dec. 28, up from $347 million, or 75 cents per share, in the same period last year. This included a penny per share from insurance gains. Sales rose to $2.6 billion from $2.4 billion a year ago.
Analysts polled by Thomson Financial forecasted earnings per share of 64 cents.
For the year, the Jacksonville, Fla.-based company reported a 26% increase in operating income from surface transportation to a record $2.2 billion, adjusting for insurance gains and other items. Sales exceeded $10 billion for the first time in the company’s history.
Full-year earnings were $1.2 billion, or $2.99 a share, down from $1.3 billion, or $2.82 a share, a year ago.
Despite softness in the housing and automotive markets, CSX reported merchandise transportation revenue increases of 7% for the quarter. Strength in the agriculture, phosphate and chemical markets was attributed to an increase in corn production for ethanol.
The company said it was also helped by improvements in its safety record, which resulted in a personal injury reserve adjustment for the quarter.
Tuesday’s earnings report seems to be a step in the right direction for the company after The Children’s Investment Master Fund, a major shareholder with a history of successfully pushing for corporate change, urged the company to shake up management and improve performance. The Children’s Fund, a London-based asset manager, owns 17.8 million shares of CSX.
CSX shares rose 5.4%, or $2.21, to $43.39.
Meanwhile, Norfolk Southern reported its fourth-quarter profit jumped 3.6% on Tuesday in spite of higher fuel costs and flat revenue from key businesses.
The Norfolk, Va.-based railroad said higher revenue from hauling general merchandise was responsible for the increase.
Norfolk Southern said it earned $399 million, or $1.02 per share, in the three months that ended Dec. 31, compared with $385 million, or 95 cents per share, in the prior year.
Analysts had predicted Norfolk Southern would earn 90 cents per share.
Other railroad companies have been slammed by higher fuel costs. Union Pacific is expecting its fuel costs for the fourth quarter to soar over $200 million from the comparable quarter the previous year. Just in November and December alone, fuel costs will be approximately $65 million higher than originally anticipated.
Union Pacific probably won’t be the only railroad to lower its outlook in the near-term because of rising fuel costs.
Union Pacific shares were flat Tuesday, inching up 1 cent to $110.46 at the close. Burlington Northern Santa Fe, the second largest U.S. railroad, slid 0.5%, or 35 cents, to $76.58. Kansas City Southern rose 1.8%, or 56 cents, to $31.44. Norfolk Southern jumped 2.6%, or $1.13, to $45.28.
CSX’s rail network spans 21,000 miles in 23 eastern states and the District of Columbia. It connects to more than 70 ocean, river and lake ports.
(The Associated Press contributed to this article.)