With merger speculation swirling around the company, CSX Corp. Chief Executive Joe Hinrichs said he is focused on continued improved performance of the Jacksonville-based railroad company.
CSX reported lower second-quarter revenue and earnings July 23, as weak freight trends continue to plague transportation companies.
“The economy overall is a mixed bag,” Hinrichs said in a telephone interview after the earnings report.
“It’s not great, it’s not bad. It’s just kind of in the middle,” he said.
CSX’s revenue fell 3% in the quarter to $3.57 billion, due to lower export coal prices, reduced fuel surcharges and a decline in the volume of merchandise shipped.
Net income fell 14% to $829 million, or 44 cents a share.
CSX’s quarterly report came about a week after reports began that the company could be a merger target by the two major western U.S. railroad companies, Union Pacific Corp. and BNSF Railway.
After The Wall Street Journal reported Union Pacific was talking to the other major Eastern railroad company, Norfolk Southern Corp., speculation emerged that BNSF would respond by making a bid for CSX.
“We’re not going to comment on any of that speculation,” Hinrichs said.
He said company officials are focused on increasing shareholder value and would be open to any conversations that would achieve that goal. But CSX is focused on its operations as an independent company.
“That will continue to be our messaging around the topic,” he said.
Hinrichs said he challenged the company’s team to find ways to reorganize and cut costs after weak freight trends emerged in the first quarter this year.
“We noticed that our revenue was not at the levels we were expecting,” he said.
77 workers cut in Jacksonville
As part of that initiative, CSX cut 125 managerial positions from its operations throughout the eastern U.S., including 77 in Jacksonville.
Hinrichs said no other layoffs are planned.
“We’re finished and we’re done and we’re moving forward,” he said.
CSX, which employs about 2,000 people in Jacksonville, reported total employment of 23,543 at the end of the second quarter.
That was up 268 from June 30, 2024, but the increase came entirely from its much smaller trucking operations. Rail operations had a slight decline in headcount.
CSX has been dealing with two significant disruptions to its rail network this year. One is a planned renovation project of a tunnel in Baltimore and the other is a rebuilding of a rail line in Tennessee that was severely damaged by Hurricane Helene last year.
“They’re both scheduled to be completed in the fourth quarter,” Hinrichs said.
“We’re very confident that’s going to happen.”
Lost revenue
The temporary closure of those two rail lines is costing CSX about $10 million a month in lost revenue.
“We’ll have that again in the third quarter but we’re looking forward to getting rid of all those extra costs in the fourth quarter,” Hinrichs said.
He said tariffs had very little effect on the company’s business in the second quarter.
“On balance it wasn’t that dramatic,” he said.
Hinrichs is hoping for a recovery in industrial production to increase freight demand.
“In the industrial side of the economy, we’ve not yet seen a recovery since COVID,” he said.
“It’s OK. It could be better.”