CSX's Higher-Than-Expected Profit Shows Turnaround Success
(Bloomberg) -- CSX Corp.’s overhaul of its operations is producing eye-popping numbers for profit, efficiency and now, volume growth. The railroad is reaping the benefit from dramatic changes under Hunter Harrison, who rammed through his Precision Scheduled Railroading techniques during the nine months he had as CEO before his unexpected death in December 2017.
- CSX cemented its turnaround success in the third quarter with a 58.7 percent operating ratio in the third quarter -- a closely watched measure of efficiency that takes costs as a percentage of sales, according to a statement Tuesday. That’s a level many in the industry thought was impossible for a railroad in the densely populated eastern U.S., but it’s the second time for CSX, which also broke the 60 percent barrier in the second quarter.
- Volume growth of 4 percent allays concerns that the railroad was slow to win back customers that fled to rival Norfolk Southern during a period of disruption when Harrison was implementing his strategy.
- Improving efficiency and volume gains allowed CSX to post record third-quarter earnings per share of $1.05, more than double from a year earlier and above the highest estimate among 25 analysts surveyed by Bloomberg.
- Shares rose 1 percent to $72.90 in New York after the close of regular trading.
- Investor confidence that Harrison’s strategy is working has helped drive up CSX 31 percent this year, more than any U.S. major railroad.