CSX Posts Solid Results

April 16, 2009
A 17% volume decline for eastern rail carrier CSX didn't entirely dampen first-quarter operating results.

CSX Corp. announced first-quarter earnings of $246 million or 62 cents per share vs. $351 million or 85 cents per share in the same period of 2008. “In this economic downturn, CSX is focusing sharply on the things that are more within our control –safety, customer service and productivity,” said Michael Ward, chairman, president and CEO. “We are taking tough actions to right-size our operations in this challenging environment.”

First quarter revenues of $2.2 billion were down 17% from the prior year, primarily due to a 17% decline in volume, said CSX. The volume declines were driven by significant weakness in industrial production, housing starts, and consumer spending, as well as in the agriculture and energy sectors.

As a result of right-sizing its train network and implementing a wide range of productivity initiatives operating expenses also declined 17%. The company maintained a 76.8 operating ratio for the quarter.

Domestic Intermodal was the only shining light among the company's marketing units during the first quarter, observed analyst firm Stifel Nicolaus. “From a volume perspective, the worst performing groups were automotive (down 53%, year on year), metals (down 48%, y/y), and phosphates and fertilizers (down 33%, y/y), and the best performing groups were domestic intermodal (flat, y/y), coal (down 7%, y/y), and food and consumer (down 7%, y/y).

“The company's balance sheet appears strong enough to weather even a protracted economic downturn,” said a Stifel Nicolaus report. “The company has prudently discontinued its formerly aggressive share repurchase program and has built up $1.1 billion in cash and short-term investments.”

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