The chairman of U.S. railroad operator CSX Corp said that the economy appears to be moving in a “positive direction” and that its major markets should grow this year.
The comments from CSX Chairman Michael Ward come a day after the company reported a 22 percent rise in profit, beating Wall Street analysts’ expectations.
“The economy seems to be moving in a very positive direction. It’s been growing,” Ward told Reuters in an interview. We’re very encouraged. We think all of our major markets will show growth year over year.”
Rail traffic is an important gauge of economic activity in the United States because they carry a range of goods whose sales provide measures of consumer demand. Wall Street watches CSX’s results closely because the company is the first of the major U.S. railroads to report first-quarter earnings.
CSX expects improvement in exports and industrial sectors throughout 2010 as consumer demand stabilizes and global trade improves.
Even the lackluster coal market was showing signs of revitalization due to export demand and should show positive year-over-year volume this year, Ward said. Demand among U.S. farmers for fertilizers ahead of the spring planting of U.S. corn and soybean crops was another bright spot.
“The areas that will continue to be less robust are things related to the housing market,” Ward said. That includes forestry, he said. “We don’t see that bouncing back anytime in the near future.”
Core pricing gains of about 5 percent in the first quarter should hold stable, and pricing gains should be between 4 percent and 5 percent for the year, the company said.
With volumes rising, CSX wants to bring back more of its 1,093 furloughed employees. As many as 2,533 were furloughed earlier, the company said.
Jacksonville, Florida-based CSX said on that first quarter earnings from continuing operations and on a net basis totaled $306 million, or 78 cents per share, versus $254 million, or 64 cents per share on an ongoing basis last year.
Revenue rose 11 percent to nearly $2.5 billion in the first quarter, including a 64 percent spike in automotive volume.
Analysts expected CSX—which operates in 23 states east of the Mississippi and in the Canadian provinces of Quebec and Ontario—to earn 69 cents a share on revenue of $2.38 billion on average, according to Thomson Reuters I/B/E/S.
Productivity gains were key as the company’s operating ratio for the quarter improved to a record 74.5 percent, compared with 76.8 percent a year earlier.
The coal business remained a low point for CSX with volume in that area down 13 percent in the quarter as coal stockpiles remained high.
CSX has said it expects demand from China to spur more movement later in the year. (Reuters)