(Reuters circulated the following article by Nick Carey on April 18.)
CHICAGO — U.S. railroad CSX Corp. said on Tuesday its net profit from ongoing operations for the first quarter rose 56 percent on the year, due to record revenue, strong demand and the effects of a company-wide efficiency drive.
CSX shares rose nearly 3 percent in after-hours trading, extending earlier gains of nearly 4 percent fueled by expectations of a solid quarter for the railroad.
Analysts said the results showed CSX was making progress with its “ONE Plan” efficiency program and benefiting from high prices fuel surcharges that it passes on to customers.
The Jacksonville, Florida-based company reported net profit of $245 million, or $1.06 a share, compared with $154 million, or 68 cents a share, a year earlier.
Wall Street analysts had forecast earnings for the quarter of 88 cents a share.
“This was a very strong quarter,” said Andrew Meister, an equity research analyst at Thrivent Asset Management, which manages more than $60 billion in assets and holds some CSX stock. “The market was expecting a strong quarter, but I am not sure if people were expecting it to be this good.”
Revenue for the quarter totaled $2.3 billion, up from $2.1 billion a year earlier. Analyst had expected revenue of $2.26 billion, according to Reuters Estimates.
CSX’s full first-quarter profit in 2005 was $579 million, but $425 million of that came from the sale of CSX’s International Terminals Business.
“CSX continued to improve its underlying business performance in a strong demand environment,” CSX Chief Executive Officer Michael Ward said in a statement.
“Most notably, our rail operations showed solid improvements in safety, service and efficiency” as the company continued to implement an efficiency drive dubbed the “ONE Plan.”
“CSX’s results are pretty indicative of the strong pricing environment and the service improvements they made through the One Plan,” said Peter Smith, an analyst at Morningstar.
Smith added that with tight capacity on the U.S. railroads as imports rise and the trucking industry suffers from a driver shortage, CSX had shown impressive bottom line growth from a 10 percent increase in revenue.
“The company is now passing on extra fuel costs through fuel surcharges to most of its customers and has also boosted velocity,” he said. “This has brought solid improvements in the company’s bottom line.”
CSX shares were trading at $69.00 on online brokerage service Inet, after closing up $2.49 at $67.27 on the New York Stock Exchange.