(Reuters) - CSX Corp (CSX.O) on Tuesday posted quarterly profit that topped Wall Street’s target after the No. 3 U.S. railroad operator continued to benefit from its drive to cut costs and boost efficiency.
CSX shares gained 2.7 percent to $66.20 in extended trading after the company also raised its 2018 revenue forecast, citing strength in its high-margin coal business.
Second-quarter net income rose to $877 million, or $1.01 per share, from $510 million, or 55 cents per share, in the year-ago period that included a $115 million restructuring expense.
Analysts, on average, had expected earnings of 87 cents in the latest quarter, according to Thomson Reuters I/B/E/S.
CSX has improved operations by trimming its workforce, reducing service times and running fewer, longer trains under Chief Executive Jim Foote. The measures were initiated by industry turnaround veteran Hunter Harrison, who was CEO when he died in December 2017.
Jacksonville, Florida-based CSX spent 36 percent more on fuel in the latest quarter, but costs fell due to job cuts and other expense controls.
Revenue for the second quarter grew 6 percent over the prior year to $3.1 billion as CSX raised prices in a tight trucking market.
Total volumes rose 2 percent as increases in coal and forest products, including lumber and paper products, more than offset declines in fertilizers and agricultural and food products.
Operating ratio, which measures operating expenses as a percentage of revenue and is a closely watched gauge of railroad performance, fell more than expected to 58.6 percent from 67.4 percent in the year-earlier quarter. CSX had aimed to lower the ratio to 60 percent by 2020.
CSX forecast 2018 revenue growth in the mid-single-digit percentage range, versus its prior call for a slight uptick.
CSX shares are up about 30 percent since March 2017, when Harrison took the helm following a push by activist investor Paul Hilal of investment fund Mantle Ridge LP.
Reporting by Lisa Baertlein in Los Angeles; Editing by Richard Chang
