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CSX, one of the country’s biggest railroad transportation companies, reported $535 million net income, or 52c per share, on $3.1 billion in revenue, beating both Wall Street estimates and last year’s second-quarter income of $512 million.
The higher revenues along with efficiency gains helped to deliver Q2 operating income of $963 million and an operating ratio of 68.6%.
CSX said growth in merchandise and intermodal volume more than offset declines in the company’s coal business.
Coal demand remained low for CSX, especially in its export arm where global oversupply reduced international demand.
CSX said overall coal revenue fell by 6% to $770 million in the quarter and 9% to $1.5 billion for the first six months of the year, compared to the same periods last year.
Volume declined in line with revenue.
The company delivered less to the export market overall, down 22% of Q2 2012.
However, metallurgical coal exports actually increased 8% while thermal coal exports declined 42% – from 8.8Mt to only 5.1Mt.
CSX said domestic market deliveries increased 5% due to higher coal generation as natural gas prices increased.
US shipments of coal to utilities by tonnage increased 9%, the first quarterly gain since the final three months of 2010.
CSX predicts its earnings will be relatively flat in 2013 compared to last year but should grow 10-15% in 2015.
The total number of carloads CSX delivered in Q2 grew 1% even though coal shipments were still down 6%.
Shipments of crude oil, fertilizer and intermodal containers of products drove the volume increase.
Shipping volume declined in coal, agricultural products, metals, construction and military equipment and alcoholic beverages.
CSX chairman, president and chief executive officer Michael Ward said the company was proud to announce the profit.
"CSX continues to drive solid growth in many of its markets and is encouraged by the team's sustained track record of delivering excellent operating performance in a wide range of market conditions," Ward said.
"We remain sharply focused on creating strong, sustained value for customers and shareholders, as the economy appears to be slowly gaining strength."
