MIAMI -- Giant North American railroads heavily dependent on the
overall vigor of the U.S. economy got a lift from cheap fuel in late
2001 but remain dogged by sagging revenues blamed on economic
recession, a wire service reports.
“We have been in a recession and the economy is recessionary still,” Michael Ward, president of CSX Transportation, told institutional investors on Tuesday.
CSX Corp., the parent of CSX Transportation, said strong coal shipments in late 2001, cost-cutting and cheap fuel had helped it overcome unusually weak fourth-quarter revenues and on Tuesday posted a 20 percent percent jump in net income, to $65 million, or 31 cents a share.
The Richmond, Virginia, operator of the biggest rail network in the eastern United States, said earnings before unusual items related to a legal settlement totaled $102 million, or 48 cents a share.
Analysts had expected 46 cents to 52 cents a share, with a consensus forecast of 48 cents, according to Thomson Financial/First Call.
Revenues slipped to a disappointing $2.01 billion from $2.05 billion, CSX executives said.
Forecasting a big lift in profitability when the U.S. economy again expands, CSX executives said revenues for chemicals, autos, metals, paper and minerals had declined after the September 11 airliner attacks, as had revenues from shipments carried on a mix of rail and other transports.
Coal shipments were up sharply, and the average cost of fuel dropped to 81 cents from $1.12 in the fourth quarter, CSX executives said during a conference call. Productivity measures had also showed good gains, the executives said.
“We have the capacity. All we need is a little help from the economy,” Ward said.
Burlington Northern Santa Fe Corp., the No. 2 U.S. railroad, also reported on Tuesday and said its fourth-quarter profits, before unusual items, fell 13 percent as freight revenues slipped.
Burlington's profits were $472 million, or 57 cents a share, down from $544 million, or 65 cents a share, a year earlier. Wall Street analysts had expected 54 cents to 60 cents a share, with a consensus forecast of 56 cents, according to a survey of nine analysts by Thomson Financial/First Call.
Net earnings in the latest quarter, ended Dec. 31, were 46 cents a share for Burlington Northern. including charges of 11 cents a share to pay for job cuts.
“It was as expected,” said an industry analyst, speaking on condition of anonymity. “Nothing in it caught me off guard.”
Revenues fell to $2.3 billion from $2.34 billion, in part because of the loss of a major transport contract with giant automaker General Motors Corp. Freight revenues fell 2 percent, to $2.27 billion.
Revenues for transporting consumer goods such as cars fell 8 percent to $819 million.
Coal shipment revenues rose 3 percent, to $546 million, on a 9 percent rise in volumes, helped by stepped-up buying by electricity generators and new business, Burlington Northern said.
Shares of both Burlington Northern and CSX rose on Monday.
Burlington, which has lagged other rails in a broad rally driven by hopes of a rebound in U.S. economic growth, was up 42 cents, or 1.5 percent, to $27.35.
CSX, whose shares have risen about 27 percent in the last 12 months, rose another 2.5 percent, or 92 cents, on Tuesday to $37.51.