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Despite severe winter weather that impacted merchandise network operations and high fuel costs, CSX Corp. logged record financial results in the first quarter, senior executives said during an earnings conference held this morning.

Revenue climbed 13 percent to a record $2.8 billion, operating income jumped 22 percent to an all-time-high $773 million and the operating ratio improved 2.1 points to a record 72.5 compared with first-quarter 2010 results. In addition, volume increased 7 percent to 1.6 million units, net earnings soared 30 percent to $395 million and earnings per share ballooned 36 percent to $1.06 on a year-over-year basis. Analysts polled by FactSet had expected earnings of $1.04 per share and revenue of $2.73 billion.

“CSX achieved growth across nearly all markets in a growing economy,” said Chairman, President and Chief Executive Officer Michael Ward.

Coal revenue jumped 19 percent to $879 million and volume rose 3 percent to 385,000 units primarily because high export demand in Europe, Asia and South America helped offset soft demand for domestic utility coal, said Executive Vice President of Sales and Marketing Clarence Gooden. Intermodal revenue rose 4 percent to $332 million and volume increased 11 percent to 553,000 units, driven by a 24 percent jump in international traffic. Domestic intermodal volume “held steady in a tightening truck market,” said Gooden.

In the merchandise sector, which includes agriculture, industrial and housing/construction business, revenue climbed 12 percent to $1.5 billion and volume rose 7 percent to 654,000 units. Volume growth was led by gains in automotive, emerging markets, forest products and metals traffic, said Gooden. Automotive volume jumped 20 percent and revenue soared 29 percent, and there will be “increased automobile demand despite the impact of the Japan disaster” going forward, he said.

However, severe winter storms — primarily in the deep South and Midwest — negatively impacted merchandise network operations in the first quarter, said EVP and Chief Operating Officer David Brown. Merchandise network velocity fell from 20.6 mph in first-quarter 2010 to 19.7 mph and average terminal dwell time rose from 25.8 hours a year earlier to 26.6 hours, he said.

In the good news department for operations, CSX achieved a record 0.78 FRA personal injury rate (vs. 0.82 a year earlier) and a 2.57 FRA accident rate (vs. 3.36 a year earlier) that was “significantly lower than in years past,” said Brown.

In terms of operating expenses, total costs increased 10 percent to $2 billion compared with first-quarter 2010. Labor and fringe expenses rose 5 percent to $765 million primarily because of inflation, volume growth and a slight increase in headcount, which rose from 29,310 in the year-ago period to 30,295, said EVP and Chief Financial Officer Oscar Munoz.

Fuel expenses skyrocketed 42 percent to $402 million as the average diesel price climbed from $2.11 per gallon in first-quarter 2010 to $2.86 per gallon. Excluding the jump in fuel costs, expenses would have increased only 4 percent year over year and the operating ratio would have stood at 70.6, said Munoz.

Nonetheless, CSX remains on track to register a high-60s operating ratio for the full year and achieve a 65 ratio no later than 2015, said Ward. For the remainder of the year, volume growth will exceed Gross Domestic Product and industrial production growth, said Gooden.

— Jeff Stagl