Subscribe to our free, weekly email newsletter!


Railroad shipping: CSX kicks off 2Q earnings season with a solid performance

By Jeff Berman, Group News Editor
July 13, 2010

The rebound in market conditions for the freight railroad industry—due to an improving economy—is evident based on second quarter earnings results for Class I railroad carrier CSX.

Following a first quarter in which the Jacksonville, Florida-based company reported solid earnings at $306 million and $0.78 per share, which was a 22 percent annual gain, the second quarter more than doubled that output. Second quarter earnings were $414 million—or $1.07 per share—a 51 percent year-over-year improvement, which beat the Wall Street estimate of $0.98 per share. 

CSX added that quarterly revenue was up 22 percent year-over-year to $2.663 billion, with revenue growth and continued operating leverage hitting record high levels for the company in the form of an operating income of $768 million—a 33 percent annual increase—and an operating ratio of 71.2 percent.

Like the first quarter, volumes in the second quarter were very strong for CSX at 1,598 million units for a 13 percent annual gain. Automotive loadings continued their strong momentum with a 63 percent increase, and metals were up 44 percent. Total merchandise was up 14 percent with 659,000 units, with coal (401,000 units) up 7 percent—marking a significant improvement from the first quarter and the first quarter of year-over-year growth since the fourth quarter of 2008—and intermodal (538,000 units) up 18 percent.

“These [quarterly] results were driven largely by volume improvement, a recovering marketplace, the ability to value-price our services, and overall safety, service, and productivity on our railroad,” said Michael J. Ward, CSX President and CEO on an earnings call this morning. “We took on higher levels of traffic profitably as our employees continued to find new ways to operate more efficiently. We are on the right path in creating value for our customers to help them compete in today’s economy…[and] we remain confident in our ability to grow, drive operating leverage, and produce strong operating results going forward.”

And Clarence Gooden, CSX executive vice president, sales and marketing said on the call that the manufacturing strength as evidenced by the Institute of Supply Management’s manufacturing index showing growth for the 11th straight month, coupled with inventory replenishment, continue to play a significant role in the economic recovery and CSX’ quarterly performance. This was reflected, he said, with inventory levels remaining below target levels in several markets.

Gooden also noted that along with volume growth the strong revenue performance in the second quarter could also be attributed to core pricing gains and the impact of higher fuel costs reflected in the CSX fuel surcharge program. CSX’ fuel expense increased $119 in the second quarter, due to higher prices and volume.

Looking ahead, Gooden said market conditions look favorable for CSX throughout the remainder of 2010.

“The macroeconomic recovery which began in late 2009 is expected to continue throughout this year,” said Gooden. “U.S. industrial production is expected to grow in excess of 3 percent in the second half of 2010. The outlook for third quarter volume and revenue is favorable, as linehaul revenue growth is expected across nearly all markets, including coal. Our network is well-positioned to handle volume growth, as we have handled these high volumes in the past.”

Avondale Partners analyst Donald Broughton wrote in a research note that CSX continues to benefit from a significant improvement in volumes as well as diligent cost containment, reinforcing his firm’s belief that CSX is a much better-run company than it was in the last cycle.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Transportation stakeholders reliant on North Carolina’s major seaports are welcoming news this week, which outlines plans to enhance the intermodal and cold chain network in the region.

The index ISM uses to measure non-manufacturing growth—known as the NMI—was 56.9 in February, which was 0.2 percent ahead of January and also 0.1 percent ahead of the 12-month average of 56.8. Economic activity in the non-manufacturing sector has grown for the last 61 months, according to ISM.

Non asset-based third-party logistics (3PL) services and logistics technology services provider Transplace said today that Brooks Bentz has joined the company in a newly-created role as president of Transplace Consulting in conjunction with the launch of the company’s new North American consulting services practice.

The advent of e-commerce continues to grow and gain increased traction over time. The many ways for consumers to order and purchase goods online continues to expand and leads to various subsequent byproducts of online purchases, including shopping through multiple channels, and delivery and payment options, among other things. These types of topics serve as the thesis in the second annual UPS Pulse of the Online Shopper Global Study issued this week by UPS and comScore Inc.

A major highlight of CEVA’s fourth quarter performance was its new business wins, which were up 14 percent for all of 2014, with Freight Management wins up 14 percent, and Ocean Freight and Air Freight wins up 30 percent and 14 percent, respectively, while Contract Logistics wins were up 2 percent.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA