Profits Up at CSX, Down at Canadian Pacific in First Quarter
The rail freight carriers' earnings season began on a mixed note as profits rose 1.7% at CSX Corp. but plunged 20% at Canadian Pacific Railway in the first quarter compared with the same period in 2016.
CSX generated $362 million in earnings or 39 cents per share. Last year, the numbers were $356 million or 37 cents. Revenue grew 10% at CSX to $2.9 billion in the first quarter versus one year ago. However, CSX recorded a $173 million restructuring charge, resulting in a 13% year-over-year increase in expenses. Operating income, or the difference between revenue and expenses, rose 1% to $712 million.
鈥淚 am pleased to join the CSX team and working together we are going to make this company the best North American railroad, capable of consistently meeting and exceeding the expectations of our customers and our shareholders,鈥 said Hunter Harrison,听the railroad's new听CEO. 鈥淎s the business environment continues to improve and we implement Precision Scheduled Railroading, CSX will realize these objectives while driving volume growth and achieving a new level of financial performance.
Canadian Pacific posted C$431 million in the first quarter, or $2.93.听A year ago, the railroad听earned C$540 million in profits or $3.51. Revenue increased 1% to $1.6 billion. Expenses grew mainly due to a 36% increase in fuel costs, but CP still came out 2.8% ahead on operating income.
鈥淐P鈥檚 strong focus on developing its bench strength resulted in a seamless leadership transition and a seasoned executive team that is focused on leveraging CP鈥檚 proven operating model,鈥 said CEO Keith Creel, referring to Harrison鈥檚 move to CSX from CP earlier this year. 鈥淲e turned a corner in March and are now seeing positive volumes, which makes us cautiously optimistic that the demand environment is improving.鈥
Revenue from intermodal services improved at both companies, another potential sign that the segment is returning after a difficult 2016.
CSX intermodal revenue rose 7% to $434 million while CP鈥檚 grew 4% to $325 million. Volume was up about 1% at CSX to 688,000 carloads and flat at 233,000听for CP. Revenue per carload rose听4%听to 6% at both companies due to improved rates on intermodal.
Nevertheless, CSX reported that domestic intermodal volumes fell 1%,听but it was able to come out ahead because of a 5% jump in the international segment. CP doesn鈥檛 separate intermodal totals based on domestic and international traffic.
CSX's operating ratio deteriorated 201 basis points to 75.2%, although when the one-time restructuring expenses were removed, the ratio improves 390 basis points to 69.2%. CP's improved 80 basis points to 58.1%.
