By Lisa Beilfuss
CSX Corp. said earnings rose a better-than-expected 11% in its
latest quarter as the rail operator benefited from what it called
"an improved pricing environment."
The company also raised its dividend 13% and announced a new $2
billion share repurchase program.
The news, which followed a warning Monday from fellow rail
company Norfolk Southern Corp., lifted CSX shares 2.4% in
after-hours trading.
The Jacksonville, Fla.-based CSX said it benefited from growth
across many of its markets and the improved pricing environment,
which was partially offset by the impacts of lower natural gas
prices, lower fuel recoveries and the strong U.S. dollar.
Lower-than-expected coal volumes have been a challenge to rail
companies, which on average earn about 15% of revenue from coal.
For CSX, it is about 20%. Coal has been weakening for years on
account of lower exports, but falling natural gas prices have sent
volumes even lower as power plants tend to switch to gas from coal
when natural gas falls below about $3, where it has traded below
since mid-January.
At a conference last month, CSX Chief Financial Officer Fredrik
Eliasson said the company had cut its domestic coal shipment
estimate for the year to down at least 5% from flat. In January,
CSX said it expected to generate double-digit growth in earnings
per share in 2015 while strengthening margins. The company didn't
reference its full-year outlook in Tuesday's release.
For the three months ended March 31, CSX earned $442 million, or
45 cents a share, up from $398 million, or 40 cents a share, a year
earlier.
Revenue was about flat from the year-ago quarter at $3
billion.
Analysts, according to Thomson Reuters, were looking for 44
cents in per-share profit on $3.02 billion in revenue.
CSX's dividend increase to 18 cents a share is payable June 15
to shareholders of record as of May 29. The company said the new
buyback program is expected to be completed over the next 24
months.
On Monday, Norfolk Southern said its first-quarter earnings and
revenue would miss Wall Street expectations, citing lower coal
volumes, among other factors.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
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