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News > Companies
CSX 3Q better than forecast
October 28, 1999: 12:56 p.m. ET

But railroad warns 4Q will be hurt by effects of Hurricane Floyd
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NEW YORK (CNNfn) - CSX Corp. posted much better-than-expected results in the third quarter Thursday but warned of worse-than-expected difficulties during the current quarter.
     The Richmond, Va., company earned $123 million, or 58 cents a share, before one-time charges related to the sale of its ocean shipping unit, during the quarter ended Oct. 1. Analysts surveyed by First Call had expected only 44 cents a share. In the year-ago period, the company posted a $78 million profit, or 37 cents a share, before one-time items.
     The company took a pre-tax charge of $315 million related to the sale of its international container shipping operations at Sea-Land Services to A.P. Moller-Maersk Line, causing a net loss of $113 million, or 54 cents a share, for the period.
     Revenue rose 19.6 percent to $2.9 billion, mostly from the inclusion of business from the former Conrail system that was integrated into rail operations as of June 1.
     Container shipping also saw improvement, with revenue rising 4.7 percent to $1.03 billion, due to a stronger rate environment. Pacific container shipping rates were up 18 percent from a year ago, and up 7 percent overall despite drops in rates in the Atlantic and the Americas.
     Container shipping operating income rose 140 percent to $120 million before the charge for the sale, from $50 million a year ago. And operating income from rail and intermodal operations rose 2 percent to $213 million from $208 million a year ago, before a $30 million restructuring credit in that period. Analysts had been expecting a substantial decrease in income from those operations due to problems with integrating Conrail into the CSX system.
     Officials of the company's rail operations told analysts Thursday morning that problems from Hurricane Floyd have compounded the challenges of integrating of the former Conrail system into its rail network and are still causing it problems in operations.
     The company bought about half of Conrail last year, but didn't start to integrate the system until June 1. Company officials said savings from the merger for the current quarter aren't expected to meet earlier projections, although they didn't give specifics.
     "About the fourth quarter, it'll continue to be a challenge," said Ron Conway, the president of CSX Transportation, the company's rail division. "The system is under stress right now. It will continue to be under stress until after the fall peak."
     He said the integration had been on track before the storm hit its eastern seaboard service area Sept. 15 and 16, and caused problems up and down the 1,000-mile long system.
     "We had the railroad stabilized, we had the velocity we wanted, then we got hit by this hurricane," said Conway.
     But the problems are likely to be felt in the fourth quarter, as it struggles to handle the surge of Conrail business and the normal seasonal peak.
     "The middle portion of our railroad is having problems assimilating the volume that is out there," said Conway. "We're going to be working at this for six to eight weeks. It'll take until middle of December to have this railroad as fluid as it was in the middle of September."
     For the first nine months, CSX earned $295 million, or $1.39 a share diluted, excluding one-time charges, compared with $320 million, or $1.49 a share, a year earlier. Revenue rose to $8.1 billion from $7.4 billion. Including the special charges and an accounting change, the company had net income of $27 million, or 13 cents a share, compared with $429 million, or $2.00 a share, a year ago.
     The good news on the third quarter helped drive the stock up 1-9/16 to 38-3/4 in early afternoon trading. Back to top

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.