CSX delivered a 2 percent profit increase in the third quarter, as the railroad operator overcame disappointing coal revenue with volume growth and higher shipping rates.
The results beat Wall Street expectations, and the railroad company slightly increased its outlook for the year.
Its shares slipped after initially rising in after-market trading Tuesday.
All the major freight railroads have been struggling with weak coal demand over the past two years, as cheap natural gas prices prompted many utilities to switch fuels. CSX said coal revenue declined 9 percent in the third quarter, to $720 million.
But CSX’s other major freight sectors all improved in the quarter.
Revenue from shipments of intermodal containers that railroads haul from ports grew 8 percent, to $431 million. And revenue from all other merchandise surged 7 percent, to $1.7 billion, as industrial and construction related shipments grew.
“I think the economy is getting better and that’s helping the company,” Edward Jones analyst Logan Purk said.
CSX Corp. operates over 21,000 miles of track in 23 eastern states and two Canadian provinces.
The Jacksonville, Fla.-based railroad said that it earned $463 million, or 46 cents per share. That’s up from $455 million, or 44 cents per share, a year ago.
CSX’s revenue grew 4 percent to nearly $3 billion, as it hauled 5 percent more carloads of freight and increased some shipping rates.
Analysts surveyed by FactSet expected CSX to report earnings of 42 cents per share on revenue of $2.95 billion.
“The third-quarter performance is an ongoing reflection of the company’s ability to capitalize on the modest improvement in the economy with a relentless focus on customer service and asset efficiency,” said Michael Ward, chairman, president and CEO of CSX.
CSX says it expects slightly higher 2013 earnings per share than in 2012. Previously, the railroad predicted relatively flat earnings.
CSX is the first major freight railroad to release first-quarter earnings. Union Pacific Corp. will release its first-quarter results on Thursday, and Norfolk Southern Corp. will follow next Wednesday.