OMAHA, Neb. (AP) — CSX Corp. (CSX) said Tuesday its second-quarter profit chugged ahead 2 percent as the economy continued to improve, so the railroad is investing an additional $100 million in its network.
The Jacksonville, Florida-based company said its net income improved to $529 million, or 53 cents per share, from $521 million, or 51 cents per share, in the same period last year.
The average estimate of analysts surveyed by Zacks Investment Research was for profit of 52 cents per share.
The freight railroad said revenue improved 7 percent to $3.24 billion from $3.05 billion last year as it hauled 8 percent more carloads of freight. Analysts expected $3.25 billion, according to Zacks.
The improving volume appears solid, but Edward Jones analyst Logan Purk said the numbers may have been inflated by shipments that were delayed earlier this year.
“I think a lot of it is pent-up demand from the winter,” Purk said.
The severe cold this winter slowed rail traffic nationwide and forced railroads to use shorter trains during the first few months of the year, and the busy rail hub of Chicago was especially hard hit by cold, snowy weather.
The weather hurt railroad’s first-quarter results, and CSX predicted that the weather impact would linger into the second quarter.
But railroad officials are encouraged by what they see, and investors often look at the number of carloads of chemicals, crops, lumber, coal, grain and containers of imported goods that railroads carry for clues about the economy’s health.
CSX Chairman, President and CEO Michael Ward said the railroad is increasing its capital spending plan by roughly $100 million to $2.4 billion for the year because of the improving economy. CSX also plans to hire additional workers.
“With the broad-based economic momentum we are seeing, the core earning strength of this company is improving and driving value for shareholders,” Ward said in a statement.
CSX affirmed its prediction for modest profit growth this year and double-digit profit growth in 2015 and beyond.
Over the past several years, relatively weak coal demand has hurt railroad profits because low natural gas prices and concerns about pollution regulations have prompted many utilities to switch from coal to gas.
CSX said it hauled 6 percent more coal in the second quarter, which is an encouraging sign, but coal revenue still fell 3 percent to $744 million because of weak pricing, particularly on export coal.
CSX shares fell 14 cents to $31.01 in after-hours trading following the release of the report. They have increased 8.3 since the beginning of the year, while the Standard & Poor’s 500 index has climbed 7 percent. The stock has climbed 28 percent in the last 12 months.
CSX Corp. operates more than 21,000 miles of track in 23 Eastern states and two Canadian provinces.
Norfolk Southern will report earnings next Wednesday, and Union Pacific will release its quarterly earnings report next Thursday.
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