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CSX Corp. on Oct. 17 announced third-quarter profit of $856 million compared with $894 million in the same quarter of 2018, but beat Wall Street expectations and in the process set a record for operating ratio for a U.S. railroad.
The Jacksonville, Fla.-base railroad’s earnings per share was $1.08 compared with $1.05 a year ago. Analysts surveyed by Zacks Investment Research expected CSX to report earnings of $1.01 per share.
Tighter cost controls helped CSX weather a decline in the volume of freight being shipped by rail. The company’s operating ratio declined to 56.8 from 58.7 a year ago.
The company over the past few years had adopted the concept of precision scheduled railroading. The idea is to transport as much freight as possible with the fewest number of railcars and locomotives using a simplified, direct line of transport across the network. It’s designed to improve efficiency and maximize income and revenue.
“I am extremely proud of our dedicated team of CSX railroaders for once again setting new records for operating efficiency, customer service and safety this quarter,” CEO James Foote said on a conference call with reporters. “These results reflect our continued commitment toward being the best run railroad in North America and providing our customers with best-in-class service.”
Operating ratio, or operating expenses as a percentage of revenue, is an industry metric used to measure efficiency. The lower the ratio, the greater the company’s ability to generate profit.
Compared with 2018, CSX’s third-quarter revenue was down 5% to $2.98 billion as the company saw declines in the coal and intermodal segments.
The drop in coal is forcing company officials to look at other freight to carry, including items carried by the trucking industry.
In another sign CSX is becoming more streamlined, third-quarter expenses dropped 8% to $1.69 million. — Transport Topics
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