CSX quarterly results beat estimates on higher freight rates
Business
Despite lower volumes shipped, strong demand has allowed railroad companies to raise price
(Reuters) - U.S. railroad operator CSX Corp posted better-than-expected quarterly profit and revenue on Thursday, as higher shipment rates had helped offset the impact of a 1% drop in volumes.
Shares of the Jacksonville, Florida-based company were up about 3% in extended trading.
Railroad operators had been struggling to move cargo on time due to labour shortages as the drop in volumes during pandemic prompted the companies to cut their workforce, now leaving them understaffed.
However, regulators and customers lay the blame on a lean operating model that involves running longer trains on fixed schedules with lesser staffing, which has driven up profits across the industry but led to deteriorating service levels.
Despite lower volumes shipped, a strong industrial demand has allowed railroad companies to raise prices, boosting their profits.
CSX, which mainly operates in the eastern part of the United States, posted first-quarter net earnings of $0.48 per share, compared with $0.39 per share, a year earlier.
Revenue rose roughly 9% to $3.71 billion in the quarter ended March 31.
Analysts on average had forecast a profit of $0.48 per share, on revenue of $3.58 billion, according to Refinitiv IBES.
CSX's operating ratio, a key profitability metric for railroads, improved nearly 2% to 60.5% from a year earlier.
