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Rails split on earnings
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January 21, 1999: 2:40 p.m. ET
Union Pacific beats Street, while CSX earnings jump the tracks
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NEW YORK (CNNfn) - Two major railroads came to a split in the tracks Thursday, with one beating Wall Street fourth-quarter estimates, while the other was derailed.
CSX Corp. (CSX) missed analysts estimates, but Union Pacific Corp. (UNP), the nation's largest railroad, was able to beat Wall Street's expectations.
CSX Corp., a railroad and container-shipping transportation company, reported fourth-quarter earnings of $108 million, 51 cents per share on a diluted basis, missing First Call's estimate of 55 cents per share. In the same period last year, the company's earnings were $215 million, or 99 cents per share.
John W. Snow, the Richmond, Va.-based company's president and chief executive officer, pointed to expenses related to bringing on more locomotives and equipment, upgrading track and other factors. He said the company will be ready for the "smooth integration" of Conrail Inc. CSX paid $4.1 billion for Conrail under a joint buyout with Norfolk Southern.
The company also said its railroad division was hurt by weak coal exports, Shipments of chemicals, metals and forest products were off from a year ago. Sea-Land Service Inc., the shipping division, continued to suffer from setbacks in the Asian markets.
For the year, CSX earned $537 million, $2.51 per share on a diluted basis, compared to $799 million or $3.72 per share in 1997. Total operating income was $1.16 billion in 1998, compared to $1.58 billion in the prior-year period.
CSX was down 7/16 at 38-1/16 in afternoon trading.
Dallas-based Union Pacific Corp. (UNP) said its results were offset by fourth-quarter accounting charges. Excluding this net, after-tax charge of $285 million, the company said, net income would have totaled $96 million or 39 cents per diluted share.
The results beat analysts polled by First Call, who were looking for 31 cents per share. In the fourth quarter 1997, the company reported a loss of $158 million and net income of $6 million.
Including these adjustments, the company would have reported a net loss of $189 million or 77 cents per diluted share, in the fourth quarter of 1998. This compares to a net loss of $152 million or 62 cents per diluted share in the fourth quarter of 1997.
In the second quarter of 1998, Union Pacific took a charge in discontinued operations to reflect the anticipated proceeds from a planned divestiture of it's trucking unit, Overnite Transportation.
However, because of softness in truck stocks, Union Pacific postponed the sale and reclassified Overnite in the fourth quarter as continuing operations. The company also took a fourth quarter $547 million pre-tax and after-tax charge to continuing operations to record the revaluation of Overnite goodwill. As a result of reversing the $262 million after-tax loss and recording the $547 million goodwill charge, fourth quarter earnings decreased $285 million.
Union Pacific Railroad reported operating income of $256 million in the fourth quarter, compared to a loss of $72 million the year before. Overnite Transportation, reported net income of $11 million, before account adjustments, compared to net income of $6 million in 1997 before goodwill.
For the total year 1998, Union Pacific reported a net loss of $633 million, or $2.57 per share, as the railroad continued efforts to restore service levels that had suffered in Southern California and other areas., and reflecting the $547 million write-down of Overnite goodwill. This compares with net income of $432 million or $1.74 per diluted share.
CEO Dick Davidson said the fourth quarter operating results were "the best in the last 15 months."
Union Pacific was up 1-3/8 at 50-3/16 in afternoon trading.
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CSX
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