Rail operator CSX (CSX)has been having one of those fundamental performances increasingly typical of companies acutely sensitive to economic fundamentals:conditions got worse throughout the second quarter of 2009, but as they closed out the period, those things stopped deteriorating at the pace to which they’d become painfully accustomed.
Take its coal business: the slump in coal shipments widened significantly in the period, falling 21% in the second quarter, three times the rate of decline the rail experienced in the first quarter of the year. Reduced usage by electric utilities, lower natural gas prices and slumping exports all contributed to the downturn.
But management said that the slide is expected to moderate in the third quarter, but without saying the trend is going to improve.
Overall, the recession continued to hurt volume. That’s bad. But hasn’t had an impact on pricing. IN fact, CSX said it expected its planned increase in 2009 core prices to come in higher than the 5% to 6% it previously forecast for the full year.
CSX recorded a 20% decline in year-over-year profits with its second-quarter results. But the operating number didn’t decline as much as analysts anticipated, coming in at 72 cents a share, not including some items, versus the 62 cents that had been anticipated. The takeaway from the conference call would appear to be that its end markets are stabilizing at current levels. That’s good enough to allow some investors to get a little optimistic about its outlook. But, with the stock up about 5%, they’re not exactly racing the engine to the crossing.
It’d likely turn out encouraging if CSX’s results are repeated when the other rail operators – most of whom have faced comparable fundamental challenges – report their numbers. Burlington Northern (BNI), which reports July 23, saw its revenue fall about 24%; ditto, for Union Pacific (UNP), which! likewis e reports July 23.
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