After maintaining its forecast of flat 2013 earnings as recently as a month ago, CSX Corp. reported third-quarter earnings that were higher than expected and said it expects slightly higher profits for the full year.
The Jacksonville-based railroad company late on Tuesday reported earnings of 46 cents a share, two cents higher than the third quarter of 2012 and three cents higher than the average forecast of analysts surveyed by Thomson Financial.
“We are pretty pleased with our third-quarter results,” Chairman and CEO Michael Ward said in an interview Wednesday.
Although CSX continues to feel the impact of lower demand for coal, which accounts for more business than any other commodity transported on the railroad, the company increased revenue in almost every other business segment in the quarter.
Total revenue rose by 4 percent to $2.999 billion despite a 9 percent drop in coal revenue.
CSX’s business is closely tied to the direction of the U.S. economy, and Ward is encouraged by recent data.
“We’ve seen some positive trends in the economy,” he said. “There’s some vibrancy in the car market and the housing market.”
Ward said U.S. housing starts are projected to rise from 780,000 last year to 950,000 this year and 1.1 million in 2014. That benefits CSX, which transports construction materials through its rail network.
Housing starts are still behind their pre-recession pace of about 1.5 million, but “it’s moving in a nice direction,” Ward said.
He also said U.S. production of light automotive vehicles is projected to reach 16.8 million next year, which would be its highest level since 2000.
As lawmakers continued to debate an end to the government shutdown Wednesday, Ward said he was concerned that an impasse could slow down the U.S. economy.
However, he said the shutdown hasn’t been affecting CSX’s business.
Congress reached an agreement Wednesday night ending the shutdown.
Ward also said there have not been any significant changes in business trends that prompted the company to upgrade its earnings forecast, but the strong third quarter has made him optimistic.
“We’re encouraged. We think we can grow faster than the economy and we proved that this quarter,” he said.
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