CSX profit jumps on volume and revenue growth

CSX's third-quarter profits jumped due to increased volume, higher fuel surcharge revenue, and efficiency gains, the railroad disclosed on Wednesday. Operating income rose 44% to $1.57 billion, while revenue climbed 12% to a record $4.02 billion. Earnings per share grew 54% to 57 cents, and adjusting for a one-time goodwill impairment, operating income surged 25% and earnings per share increased 30%.

The railroad's operating ratio improved by 8.8 points to 60.9%, with expenses dropping 2%. CSX set a U.S. quarterly record for fuel efficiency, averaging 0.92 gallons per 1,000 gross ton-miles. Productivity improved 6%, measured by million gross ton-miles per employee, as overall rail employee headcount fell 6.2% compared to the previous year.

CSX's Chief Executive Steve Angel credited the company's progress in productivity for driving substantial growth in profitability. The company raised its revenue growth forecast for the year to high single-digits, up from prior guidance of mid-single-digit growth. Angel emphasized that the railroad will focus on ensuring sufficient resources across the network to support a growing business.

Overall freight volume increased 5% for the quarter, with intermodal up 7%, merchandise up 3%, and coal up 2%. The intermodal growth was entirely due to domestic shipments, as international traffic declined slightly. Improved productivity has helped CSX set an all-time U.S. quarterly record for fuel efficiency, while key operations metrics declined, including average train velocity and terminal dwell time.

The railroad's service metrics also fell compared to a year ago, with intermodal and carload trip-plan compliance down 10 points each. Despite facing congestion at its Fairburn terminal outside Atlanta, CSX made investments to handle increased intermodal volume. CSX's safety performance improved, with the personal injury rate down 17% and the train accident rate down 5%.