Csx Profit Rose 8% In The Third Quarter But Hurricane Damage Will Impact Current Period

FILE - A CSX freight train sits on a siding in downtown Pittsburgh, Nov. 19, 2022. (AP Photo/Gene J. Puskar, File)
FILE - A CSX freight train sits on a siding in downtown Pittsburgh, Nov. 19, 2022. (AP Photo/Gene J. Puskar, File)

CSX's delivered 3% more shipments in the third quarter to help drive its profit 8% higher, but only modest volume growth is expected in the rest of the year as the Southeast rebuilds after two major hurricanes.

The railroad said Wednesday that it earned $894 million, or 46 cents per share. That's up from $828 million, or 41 per share a year ago. That's lower than the 48 cents forecast by the analysts surveyed by FactSet Research.

The Jacksonville, Florida-based railroad is recovering from Hurricanes Helene and Milton that battered its extensive network in the Southeast. Some trains had to be re-routed across the region as tracks are cleared and repaired.

The railroad expects the hurricanes to be a $50 million drag on its fourth-quarter results through a combination of rebuilding costs and lost revenue. CSX CEO Joe Hinrichs said Helene was the most damaging hurricane to hit the railroad since Katrina in 2005, and cost CSX about $10 million to $15 million in the third quarter, but CSX worked to recover quickly by clearing more than 15,000 trees from the tracks and setting up 400 generators to keep signals running after the storms.

Hinrichs said the railroad has remained “flexible and resilient” despite the storm damage and “we remain ready to meet our customers' needs.”

In addition to the disruption from the hurricanes, CSX said demand for metals and automotive shipments is weaker than expected. As a result, the railroad's revenue is expected to be down about $200 million in the fourth quarter.

During the quarter that ended Sept. 30, the railroad said its revenue crept up 1% to $3.62 billion. Analysts were expecting CSX to report revenue of $3.68 billion.

Shares in CSX Corp. fell about 4% in after-hours trading following the earnings report. Through the close of trading Wednesday, the stock is up 13% so far this year.

Edward Jones analyst Jeff Windau noted CSX dealt with a challenging quarter where pricing was hurt by lower fuel surcharges and weak coal prices. And that was before the hurricanes hit. But he said CSX’s efficiency will help it recover.

The railroad has been working for years to reduce its expenses by running fewer, longer trains, so it can operate with fewer locomotives and train crews. That work to streamline the railroad’s operations continued this quarter with expenses declining 2% to $2.27 billion.

Separate from the operating challenges, CSX continued to make headway with improving relations with its employees as seen in several new contracts that were announced ahead of schedule. The votes on those deals have been mixed so far, but the railroad's relationship with its unions is much better than two years ago when the industry reached the brink of a nationwide strike.

Hinrichs said CSX has been working hard since he took over two years ago to make sure employees feel valued. Since the last negotiations, nearly all CSX employees have gained paid sick time, and Hinrichs has been working to address other quality-of-life concerns.

“I can tell you that we feel very strongly that we’re seeing the results of the efforts that we put in,” Hinrichs said.

CSX is one of the nation’s largest railroads serving the eastern United States.

___

Follow Josh Funk online at https://apnews.com/author/josh-funk,https://www.twitter.com/funkwrite and https://www.linkedin.com/in/funkwrite.