April 13, 2010 / 10:47 PM / 8 years ago

UPDATE 3-CSX earnings rise 22 pct in 1st quarter

* Revenue up 11 percent

* Earnings beat analysts’ estimates

* Shares rise in after-market trade (Adds details, data)

By Carey Gillam

KANSAS CITY, April 13 (Reuters) - U.S. railroad CSX Corp CSX.N reported a 22 percent jump in quarterly earnings on Tuesday, beating analysts’ estimates and offering fresh signals that the economy is ticking upward.

CSX, the first of a group of major U.S. railroads to report first-quarter earnings, said internal efficiency gains were key to its results, but cited a “gradual and steady growth in the economy” as also helping.

Strong volume growth was driven by rebounding steel consumption consistent with the ongoing economic recovery, CSX said. Improving demand from automotive and energy markets, combined with low inventories pushed domestic steel production higher.

And both export and domestic demand was strong for fertilizers ahead of a new planting season, the company said.

Investors responded by pushing shares up more than 1 percent at $53.91 in after-hours trade.

Dahlman Rose analyst Jason Seidl said the results bode well for CSX and the railroad industry overall.

“This is the first indication that the railroads are going to be able to bring increased traffic down to the bottom line,” Seidl said. “These are very strong quarterly results for them.”

Jacksonville, Fla.-based CSX said first quarter earnings from continuing operations and on a net basis totaled $306 million, or 78 cents per share, versus $254 million, or 64 cents per share on an ongoing basis last year.

Revenue rose 11 percent to nearly $2.5 billion, with gains across most of the company’s markets, including a 64 percent spike in automotive volume, the company said.

Analysts, on average, expected CSX — which operates in 23 states east of the Mississippi and in the Canadian provinces of Quebec and Ontario — to earn 69 cents a share on revenue of $2.38 billion, according to Thomson Reuters I/B/E/S.

Gains in productivity were key as the company’s operating ratio for the quarter improved to a record 74.5 percent, compared to 76.8 percent a year earlier.

U.S. rail traffic, considered a key measure of economic activity because of the breadth of goods they carry, generally has been improving due largely to active movement of commodities and automotive volume gains.

The coal business remained a low point for CSX with volume in that area down 13 percent in the quarter as coal stockpiles remained high.

CSX has said it expects demand from China to help spur more movement later in the year. (Reporting by Carey Gillam; Editing by Bernard Orr)

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