CSX profit tops Wall St view as costs drop

CHICAGO (Reuters) - No. 3 U.S. railroad CSX Corp (CSX.N) on Monday posted a better-than-expected quarterly profit by slashing costs to offset a big fall in freight volumes, boosting its shares more than 4 percent.

The company's chief executive said there were signs of a bottom in many of its markets, and it reported second-quarter net income of $308 million, or 78 cents a share, compared with $385 million, or 93 cents a share, a year earlier.

Excluding discontinued operations at the Greenbrier resort, which went bankrupt in March and was sold off to a West Virginia coal executive in May, CSX earned 72 cents per share -- 10 cents above analysts' average forecast, according to Reuters Estimates. CSX had owned the Greenbrier since 1910.

CSX said revenue in the quarter fell more than 24 percent to $2.19 billion. However, the company's operating expenses were nearly 27 percent lower at $1.60 billion.

Freight volumes were down 21 percent as the recession continued to hurt freight volumes, the Jacksonville, Florida-based company said.

Coal shipments dropped 20 percent in the quarter, while metal and chemical shipments were down 53 percent and 20 percent, respectively.

"While the economy continues to significantly impact our business, there are some signs that we may be seeing the bottom in many markets," Chief Executive Michael Ward said in a statement.

The major U.S. railroads have so far weathered the downturn well, posting robust profits in recent quarters despite weak freight volumes, thanks to strong discipline on pricing. Analysts have warned, however, that a prolonged recession could put the railroads under pressure to lower their freight rates.

CSX reported that revenue per unit -- or rail car -- was down in most industrial segments, and 5 percent overall. Revenue per unit for metals shipments fell 12 percent and dropped 11 percent for phosphates and fertilizers. Revenue per unit was up only for coal shipments (2 percent) and chemicals (1 percent).

CSX shares rose 4.4 percent to $34.00 after closing at $32.54 on the New York Stock Exchange.

(Reporting by Nick Carey; Editing by Gary Hill)