CSX 1Q profit jumps 22% on higher rates despite service woes
OMAHA, Neb. (AP) — CSX railroad struggled to keep up with demand in the first three months of the year but still managed to deliver 22% more profit thanks to higher shipping rates offsetting a slight decline in the number of shipments it handled.
The Jacksonville, Florida-based railroad said Wednesday it earned $859 million, or 39 cents per share, in the first quarter. That’s up from $706 million, or 31 cents per share, a year ago.
The results beat Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of 38 cents per share in the latest quarter.
In recent weeks, several groups of railroad shippers have complained to regulators about rail shipping delays that have forced grain mills, ethanol plants and food producers to idle their plants at times while waiting for trains. Federal regulators plan to hold a hearing on the issues next week.
But the problems predate those complaints. The railroad has been struggling for some time to hire the workers it needs as the economy recovers from the pandemic.
“No matter where you go, there’s a labor shortage,” CSX CEO Jim Foote said. “I don’t care if you go to a fast-food restaurant or wherever you go — the lines are longer, there’s not as many people working as there used to be, and we’re no different.”
Foote said the key to improving service is hiring more workers, and the railroad has been making gradual progress on that this year. And staffing has improved since the omicron wave of the pandemic peaked in January.
At the start of the year, CSX had only about 6,218 daily active employees on average at the height of the omicron wave in January. That jumped to 6,459 in February and has continued growing to hit 6,629 on average in April as more new employees completed their training.
Foote said demand for the railroad’s services remains strong but volume was down 2% in the quarter as CSX struggled to handle all the shipments. He expects rail operations to continue improving gradually as more workers come onboard.
The freight railroad’s revenue jumped 21% to $3.41 billion in the period, which also beat Street forecasts. Five analysts surveyed by Zacks expected $3.29 billion.
Edward Jones analyst Jeff Windau said CSX delivered solid profit growth despite the hiring and service challenges because it has been able raise rates and charge higher fuel surcharges as diesel prices soar.
CSX said it now expects revenue and operating income to grow at a double-digit rate this year because demand remains so strong.
CSX Corp. is one of the nation’s largest railroads, and it operates more than 21,000 miles (34,000 kilometers) of track in 23 Eastern states and two Canadian provinces. It recently got approval to add about 1,200 miles of track and three additional states to its network later this year when it acquires Pan-Am Railways in the northeastern United States.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on CSX at https://www.zacks.com/ap/CSX