Subscribe to our free, weekly email newsletter!


Railroad shipping: CSX reports record second quarter earnings

By Jeff Berman, Group News Editor
July 20, 2011

Class I railroad carrier CSX got things rolling on the tracks with record-setting second quarter earnings of $506 million and $0.46 per share for a 28 percent annual gain. This topped Wall Street estimates in the $0.44 per share range.

Quarterly operating income at $926 million was up 21 percent, and operating income—at a record $926 million—was up 21 percent. Quarterly revenue at $3.019 billion was up 13 percent.

Volume growth was strong for CSX overall in the second quarter, with total volume at 1,646 total units for a 3 percent improvement over 2010. Automotive loadings were down 1 percent, and food and consumer loadings were up 8 percent, and chemicals were up 3 percent. Total merchandise was up 3 percent at 677,000 units. Coal was down 3 percent at 388,000 units, and intermodal continued its solid momentum up 8 percent at 581,000 units.

“Second quarter earnings were driven by volume which grew faster than the general economy and pricing that reflects the value of freight rail transportation and recoveries that off set higher fuel prices,” said CSX President and CEO Michael Ward on an earnings conference call earlier today.

And with the economy in its second year of expansion, positive trends are continuing in the markets CSX serves at a more moderate pace, said Clarence Gooden, CSX executive vice president, sales and marketing. Gooden also noted that the Institute of Supply Management’s July Manufacturing Report on Business was solid in June, with the index above 50 at 55.3, reflecting continued expansion in U.S. manufacturing, while its Customer Inventories index was at 47, explaining that when this index is below 50 indicates inventories are at a level that is supportive of manufacturing growth.

The performance of the markets CSX serves will support profitable growth, said Gooden.

Volume increases for the second quarter drove $86 million in annual growth revenue for CSX, with Gooden noting the combined effects of rate and mix responsible for $150 million of the company’s annual revenue increase.

Quarterly revenue per unit—at $1,834—increased ten percent and was driven by a combination of price, fuel recovery, and mix.

“Same stores sales pricing increased 7.2 percent and continues to outpace rail inflation, which is currently forecasted at 4.6 percent for the year,” said Gooden.

Same store sales are defined as units with the same customer, commodity, and car type and at the same origin and destination. These sales represent about 75 percent of the CSX traffic base.
Avondale Partners analyst Donald Broughton wrote in a research note that CSX did a solid job containing costs in the second quarter and was more than able to make up for cost inflation via price increases.

Prior to its earnings announcement, CSX said it expects to make 2011 capital investments of $2.2 billion, which is consistent with its intentions to reinvest an average of 18 percent of its revenues into its business through 2015 to further enhance the capacity, quality and flexibility of its rail network.  The company added that it remains on target to achieve its current near- and long-term financial guidance, including a high-sixties operating ratio in 2011 and a 65 percent operating ratio by no later than 2015.

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

Intermodal units, at 278,767 containers and trailers were up 6.7 percent compared to the same week last year and marks the third best week for intermodal ever recorded based on AAR’s data.

LM Group News Editor Jeff Berman recently conducted a wide-ranging interview with Bobby Harris, President and CEO of non asset-based 3PL BlueGrace Logistics about various aspects of the freight transportation market.

It’s small, but senior brass at YRC Worldwide will take it. After nearly seven years of continuing losses in excess of $2.6 billion, the parent of the nation’s second-largest LTL carrier posted a narrow net profit in the third quarter ended Sept. 30.

As was the case for the second quarter, third quarter earnings results for publicly-traded less-than-truckload (LTL) carriers are again strong. Signs of solid earnings results from carriers that have posted earnings to date include tonnage increases, gains in weight per shipment and average daily shipments, higher yield, and revenue per hundredweight.

While the holiday season is known to bring good tidings and cheer to all, it may also come with another thing that is not so pleasant: higher rate freights. That was the thesis of a commentary written by Mark Montague, industry pricing analyst and chief market-watcher for DAT, a Portland, Ore.-based subsidiary of TransCore.

Comments

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


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA