Once a freight train gets up to full speed, its momentum is something to behold.
Rail carrier CSX
With year-over-year increases to both revenue and operating income, CSX rolled along with a 6% increase to adjusted net earnings. The company withstood a 10% decline in overall freight volumes on the strength of both operational efficiencies and a pricing environment that has thus far been resilient to the slowdown. Continuing another positive trend, CSX also improved its operating ratio by 110 basis points to 74.1%.
Stop the train!
If you're thinking all this sounds too good to be true, I agree. During the fourth quarter of 2008, Fools witnessed an incredible one-two punch of abrupt demand erosion and production declines throughout several industrial sectors of the U.S. economy. Pronounced weakness from key manufacturers like Ford
Even a steaming locomotive can't overcome that kind of braking power, and I expect results from this first quarter of 2009 to look decidedly different for CSX and its competitors. As miners of everything from copper to coal have scaled back their production volumes in recent months, a collision with earnings for the rail companies is -- in my opinion -- inevitable.
Both CSX and competitor Norfolk Southern