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Shares in CSX chugged higher on Wednesday after the biggest railroad in the eastern US posted upbeat first quarter results — its first set of earnings under new chief executive and industry veteran Hunter Harrison.
Shares in the Florida-based company climbed more than 3 per cent in extended trading after the company said profits climbed to $362m or 39 cents a share in the quarter ended in March, compared with $356m or 37 cents a share in the year ago period. Adjusting for one-time items like a $173m restructuring charge, adjusted earnings of 51 cents a share, were above analysts estimates of 44 cents.
Revenue for the quarter rose 10 per cent to $2.9bn, ahead of Wall Street forecasts of $2.8bn and reflecting volume growth across most of its markets.
Coal volumes increased 3 per cent from a year ago, while revenues rose 31 per cent over the same period. The rise in revenue comes after declines in coal shipments took a toll on freight railroads. Indeed, despite the fourth-quarter bump, the company’s coal business slowed from $3.7bn in 2011 to about $1.8bn last year.
“As the business environment continues to improve and we implement Precision Scheduled Railroading, CSX will realize these objectives while driving volume growth and achieving a new level of financial performance,” Mr Harrison said. Mr Harrison is known for pioneering precision railroading, a strategy that involves running trains faster and closer to schedule rather than waiting for them to fill up.
Mr Harrison joined CSX last month from Canadian Pacific, after CSX bowed to pressure from activist hedge fund Mantle Ridge. Mr Harrison, who had unsuccessfully pursued mergers with CSX and Norfolk Southern while he was CEO of CP, also joined the board with four others including Mantle Ridge founder Paul Hilal, giving the fund nearly 40 per cent of the seats.