Rail and Intermodal Transport Company CSX Points to Economic Recovery for Increased Profits

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Researched by Industrial Info Resources (Sugar Land, Texas)--Rail and intermodal operator CSX Corporation (NYSE:CSX) (Jacksonville, Florida) recently reported first-quarter net earnings of $306 million, up 24% from the previous year's 1Q net earnings of $246 million. "We're encouraged by what we see in the external environment, as the industrial economy continues to gain momentum," said Chairman, President and CEO Michael Ward in a conference call. "Revenues in the quarter improved 11%, driven by volume gains across most markets."

Volumes and revenues in three of the company's four major transportation sectors showed year-over-year increases:

• Merchandise - volume up 7%; revenue of $1.2 billion was up 11% from 1Q09
• Automotive - volume up 64%; revenue of $170 million was up 79% from previous year
• Coal - volume down 13%; revenue of $736 million was down 1%
• Intermodal - volume up 14%; revenue of $323 million was up 20% year over year

Overall volume was up 5%, and total revenue was up 11%.

"While coal volumes were down for the first quarter, we expect coal volumes to increase for the full year 2010," said Clarence Gooden, executive vice president for sales and marketing. "Looking forward, the ongoing economic recovery is expected to result in growth in most markets, led by growth in the non-housing-related markets."

Within the Merchandise segment, the Metals segment and Phosphates and Fertilizers segment showed strong year-over-year growth. The shipped volume of metals increased 27%, while revenue grew 32%. Volumes in the Phosphates and Fertilizers segment increased 32%, with revenue increasing 41%.

"The macroeconomic recovery which began in late 2009 is expected to continue throughout this year. The U.S. industrial production is expected to grow in excess of 4% for each quarter in 2010. As a result, the outlook for second-quarter volume and revenue is favorable, as line-haul revenue growth is expected to cross nearly all markets, including coal," said Gooden.

Industrial Info is tracking more than $370 million of rail upgrades being performed by CSX this year. Included in these upgrades are the $40 million upgrade of the 1,500-mile freight rail system in Alabama and the $44 million upgrade to CSX's freight rail system in Florida. Both upgrades are scheduled to be complete by the end of the year. Information on these and other CSX projects is available in Industrial Info's North American Industrial Database.

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