(Adds details, background, company comment)
By Nick Carey
CHICAGO Oct 12 No. 3 U.S. railroad CSX Corp
on Wednesday reported a lower quarterly net profit that
was hurt by an 8 percent drop in revenue and freight volumes,
but came in above market expectations and sent its stock up
nearly 3 percent.
"Our financial results demonstrate CSX's ability to deliver
value for shareholders and customers in the current business
climate," Chief Executive Officer Michael Ward said in a
The company said coal, which has long been a large and
lucrative piece of business for major U.S. rail companies,
continued its slide with volumes down 21 percent and revenue off
20 percent in the three months ended Sept. 30.
Railroads have been hoping for a bottom to the slide in coal
that began in late 2014, as low energy prices encouraged
utilities to switch to burning cheaper natural gas. Coal exports
have also been hurt by the strong U.S. dollar.
CSX reported a drop in revenue for all the goods it hauls,
with the exception of automotive shipments, where revenue was up
6 percent thanks to continued robust U.S. auto sales.
Last week, sections of CSX's network were closed due to
Hurricane Matthew, though the financial effects of delays and
any damage caused will not be known until it posts
fourth-quarter results in January.
The Jacksonville, Florida-based railroad reported
third-quarter net income of $455 million or 48 cents per share,
down nearly 8 percent from $507 million or 52 cents per share a
Analysts had on average expected earnings per share of 45
The company said that its operating ratio - or its operating
expenses as a percentage of revenue, a key metric for Wall
Street analysts and investors - worsened in the quarter, rising
70 basis points to 69 percent.
The company said it was working on network and technology
improvements, plus seeking new business to drive down its
operating ratio to the mid-60s in the long term.
Revenue was down 8 percent at $2.7 billion from $2.94
billion a year earlier.
In post-market trading CSX shares were up 2.6 percent at
(Reporting by Nick Carey; Editing by Sandra Maler and Lisa