Luke Sharrett/Bloomberg News
The rail freight carriers’ earnings season began on a mixed note as profits rose 1.7% at CSX Corp. but plunged 20% at Canadian Pacific Railway in the first quarter compared with the same period in 2016.
CSX generated $362 million in earnings or 39 cents per share. Last year, the numbers were $356 million or 37 cents. Revenue grew 10% at CSX to $2.9 billion in the first quarter versus one year ago. However, CSX recorded a $173 million restructuring charge, resulting in a 13% year-over-year increase in expenses. Operating income, or the difference between revenue and expenses, rose 1% to $712 million.
“I am pleased to join the CSX team and working together we are going to make this company the best North American railroad, capable of consistently meeting and exceeding the expectations of our customers and our shareholders,” said Hunter Harrison, the railroad’s new CEO. “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.
Canadian Pacific posted C$431 million in the first quarter, or $2.93. A year ago, the railroad earned C$540 million in profits or $3.51. Revenue increased 1% to $1.6 billion. Expenses grew mainly due to a 36% increase in fuel costs, but CP still came out 2.8% ahead on operating income.
“CP’s strong focus on developing its bench strength resulted in a seamless leadership transition and a seasoned executive team that is focused on leveraging CP’s proven operating model,” said CEO Keith Creel, referring to Harrison’s move to CSX from CP earlier this year. “We turned a corner in March and are now seeing positive volumes, which makes us cautiously optimistic that the demand environment is improving.”
Revenue from intermodal services improved at both companies, another potential sign that the segment is returning after a difficult 2016.
CSX intermodal revenue rose 7% to $434 million while CP’s grew 4% to $325 million. Volume was up about 1% at CSX to 688,000 carloads and flat at 233,000 for CP. Revenue per carload rose 4% to 6% at both companies due to improved rates on intermodal.
Nevertheless, CSX reported that domestic intermodal volumes fell 1%, but it was able to come out ahead because of a 5% jump in the international segment. CP doesn’t separate intermodal totals based on domestic and international traffic.
CSX’s operating ratio deteriorated 201 basis points to 75.2%, although when the one-time restructuring expenses were removed, the ratio improves 390 basis points to 69.2%. CP’s improved 80 basis points to 58.1%.
|By Transport Topics
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