By Apratim Sarkar
April 22 (Reuters) – U.S. railroad operator CSX on Wednesday reported higher first-quarter profit and revenue, helped by strong intermodal volumes and firm pricing, sending its shares up nearly 7% after the bell.
Strong intermodal demand, supported by steady consumer spending, has helped U.S. rail operators such as CSX counter softness in coal and some industrial freight.
Intermodal volumes are the amount of freight moved using multiple modes of transportation, such as rail, truck and ship, without the cargo being handled when switching modes.
CSX executives said in a post-earnings call that customers are identifying selective opportunities amid global disruptions, especially in energy-linked and chemical markets, but said the longevity of those trends remains uncertain.
“(The) ongoing conflict in the Middle East and elevated energy prices are creating uncertainty across global supply chains, and we’re watching the situation closely as it could influence inflation and customer demand in the months ahead,” CEO Steve Angel said.
“Higher fuel prices improve rail’s relative value proposition versus trucking, which could support additional volume conversion as the year progresses,” he said.
Total fuel expenses were up 9.8% to $302 million during the reported quarter from a year ago.
The resulting increase in diesel costs weighs on CSX’s expenses in the near term, though most of the impact is passed on to customers via fuel surcharges, largely neutralizing the impact on earnings over time.
The Jacksonville, Florida-based company’s first-quarter revenue rose 2% to $3.48 billion.
It posted a profit of 43 cents per share, compared with 34 cents per share a year earlier
The company’s operating margin was 36% for the quarter, up 560 basis points from the year-ago period.
(Reporting by Apratim Sarkar; Editing by Pooja Desai)
