UPDATE 2-CSX qtrly profit beats expectations, shares rise

* Q3 EPS from continuing ops of 74 cents

* Beats Wall St consensus EPS view of 71 cents

* Helped by cost cuts, lower fuel prices

* Shares rise 2.8 pct in after-hours trade
(Recasts first sentence, adds details on volume, other
background)

CHICAGO, Oct 13 (Reuters) - CSX Corp (CSX.N), the No. 3
U.S. railroad, reported stronger-than-expected quarterly profit
on lower costs and said it believed the "worst of the recession
is likely behind us," sending its shares up nearly 3 percent.

CSX on Tuesday reported third-quarter net income from
continuing operations of $293 million, or 74 cents a share,
compared with $380 million, or 93 cents a share, a year
earlier.

On that basis, analysts expected the company to report a
profit of 71 cents a share, according to Thomson Reuters
I/B/E/S.

CSX said revenue in the quarter fell 23 percent to $2.3
billion, in line with analysts' expectations, while operating
expenses fell by 24 percent, or $537 million, helped by
dramatically lower fuel costs.

The Jacksonville, Florida-based company said that while
overall freight volumes continued to decline during the
quarter, "the rate of decline continued to slow in nearly all
markets compared to the second quarter."

The largest decline in volume came in metals shipments,
where the global downturn has translated into weak demand from
the automotive and construction industries. But CSX said the
decline in demand moderated during the quarter due to low
inventories and "an improvement in automotive production"
thanks to the "cash for clunkers" program, a part of the Obama
administration's economic stimulus plan.

The company said it spent on average about $1.88 a gallon
on fuel in the quarter, down from $3.57 a gallon last year.

CSX shares were up 2.8 percent in after-hours trading on
Tuesday after closing at $44.28 on the New York Stock
Exchange.
(Reporting by James B. Kelleher, editing by Matthew Lewis)