CSX Corp. on Thursday reported a quarterly per-share profit that just missed estimates but sales that just topped them, as shipping demand remained sluggish.
The railroad company reported third-quarter net income of $846 million, or 42 cents a share, compared with $1.11 billion, or 52 cents a share, in the same quarter last year. Revenue fell to $3.57 billion from $3.89 billion in the prior-year quarter.
Analysts polled by FactSet expected CSX to report adjusted earnings of 43 cents a share on revenue of $3.55 billion.
Sales were hit by less-frequent connections with other forms of transportation to haul goods to different locations. Those connections, known as “intermodal” shipments, remained “challenged,” Chief Executive Joe Hinrichs said in a statement. The company shipped more coal, but coal prices fell, it said. But it also reported “solid gains in merchandise pricing.”
Shares of CSX
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fell 0.1% in after-hours trade.
CSX, whose rail lines cover a good part of the Eastern U.S., reported after its Western U.S. counterpart, Union Pacific Corp.
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put up a third-quarter profit that topped analysts’ expectations, despite a decrease in railcar shipments and “continued inflationary pressures.”
Citi analyst Christian Wetherbee said Union Pacific’s results marked a “solid start to rail earnings against low expectations.”
The results for both rail carriers arrive as the shipping industry tries to rebound from the supply-chain disruptions during the pandemic — after a surge in online buying caught the world’s distribution networks off-guard — that drove prices and profits higher.
Demand for shipments later waned, after higher prices for food and other basics re-centered consumer spending on essentials. Retailers, in turn, cut back on orders as they tried to offload goods that customers didn’t want as much, which rippled through to how many items got shipped to stores via ship, rail or truck.
Concerns since have grown over rail safety, following Norfolk Southern’s
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derailment in Ohio earlier this year, and rail service, after years of cutting costs and guarding profits led to longer shipment times. Major rail operators say they’re trying to staff up and improve service. But after a rail-worker strike was averted last year, labor tensions have lingered through this year as rail operators and unions tried to resolve differences over time off and sick leave, which workers said was deeply insufficient.
Ahead of the earnings, CSX on Thursday announced the ratification of a paid sick leave agreement with a railroad signalmen union that covered nearly 400 employees.
BofA analysts last month upgraded CSX shares to a buy, after the company named Mike Cory, an industry veteran, as chief operating officer. The analysts said Cory was an operations protégé of Hunter Harrison, a rail executive, known as an industry turnaround artist, including at CSX.
This story originally appeared on Marketwatch
