CSX Tops Estimate As Volumes Improve

(RTTNews) - Railroad operator CSX Corp (CSX), Tuesday reported an increase in third-quarter profit, led by volume growth across most markets amid an improving domestic economy, with both earnings and revenues topping Wall Street estimates.

CSX expects to sustain a double-digit earnings growth and margin expansion in 2015, and continues to target a mid-60s operating ratio in the longer term.

The results come as a rebound in the U.S. economy led to increased shipments of industrial, coal, construction and agricultural products.

CSX's total shipment volume for the quarter climbed 7 percent from last year, with average revenue per unit rising 1 percent.

The company's merchandise volume for the quarter rose 9 percent, coal volume was up 7 percent, and intermodal gained 5 percent.

CSX said coal volume increased due to higher shipments of domestic coal attributable to marketplace gains and utilities replenishing stockpiles as a result of the colder-than-normal winter. This was partly offset by a drop in export coal as a result of continued weakness in the global market.

CSX, based in Jackson, Florida, posted quarterly net earnings of $509 million or $0.51 per share compared with $455 million or $0.45 per share last year.

On average, 25 analysts polled by Thomson Reuters estimated earnings of $0.48 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the third quarter were up 8 percent at $3.22 billion compared with $2.99 billion in the prior year. Eighteen analysts had a consensus revenue estimate of $3.15 billion for the quarter.

The company's operating ratio for the quarter improved to 69.7 percent from 71.9 percent last year.

Recently, the Wall Street Journal reported that CSX spurned a merger offer from Canadian Pacific Railway Ltd (CP, CP.TO). It isn't known if Canadian Pacific has shelved the merger offer, the newspaper said.

A deal between the two of North America's largest railroad operators would lead to the creation of an industry leader with combined annual revenue of about $18 billion. But a potential hurdle to a merger could be regulatory opposition from the U.S. Surface Transportation Board.

Canadian Pacific, which is Canada's second-largest railroad operator, has a market value of about $32 billion, while CSX has a market value of $32.6 billion.

CSX closed Tuesday at $32.61, up $0.91 or 2.87%, on a volume of 18.5 million shares on the NYSE. In after hours, the stock gained $0.66 or 2.02% at $33.27.