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In the first quarter, CSX Corp. beat Wall Street’s expectations — albeit very low expectations. The Class I registered earnings of $246 million, or 62 cents per share, vs. first-quarter 2008’s $351 million, or 85 cents per share. Analysts polled by Thomson Reuters had forecasted earnings of 51 cents per share.

First-quarter revenue totaled $2.25 billion, down 17 percent compared with first-quarter 2008’s total primarily because traffic volume declined 17 percent, falling by double digits in nearly every category. Analysts had anticipated revenue of $2.26 billion.

Merchandise revenue decreased 20 percent to $1 billion, coal revenue declined 2 percent to $744 million, automotive revenue plummeted 53 percent to $86 million and intermodal revenue dropped 22 percent to $270 million.

The quarterly revenue and traffic decreases weren’t unexpected given the “significant weakness” in industrial production, housing starts and consumer spending, as well as sluggish agriculture and energy sectors, CSX senior executives said during an earnings conference held this morning. The Class I’s ability to rein in costs didn’t surprise them, either.

Quarterly operating expenses dropped 17 percent year over year to $1.7 billion primarily because CSX “right-sized its resources,” boosted productivity, and paid less for fuel and labor, said Executive Vice President and Chief Financial Officer Oscar Munoz. Fuel costs dropped 57 percent to $191 million and labor/fringe expenses declined 11 percent to $662 million as the railroad reduced headcount from first-quarter 2008’s 32,856 employees to 31,134, he said.

By controlling costs, CSX was able to keep its quarterly operating ratio stable at 76.8, said Chairman, President and Chief Operating Officer Michael Ward. The Class I’s ratio clocked in at 77 in first-quarter 2008.

Overall, the first-quarter financials results prove CSX can withstand the recession, said Ward.

"In this economic downturn, CSX is focusing sharply on the things that are more within our control — safety, customer service and productivity," he said. “This global recession will not throw us off course.”

— Jeff Stagl