Josh Funk, Ap Business Writer <\/p>\n
Photo: Gene J. Puskar, AP <\/p>\n
In this Thursday, Jan. 26, 2017, photo, a CSX freight train passes through Homestead, Pa. CSX Corp. reports financial results, Tuesday, July 18, 2017. <\/p>\n
In this Thursday, Jan. 26, 2017, photo, a CSX freight train passes through Homestead, Pa. CSX Corp. reports financial results, Tuesday, July 18, 2017. <\/p>\n
CSX execs defend early progress in restructuring railroad <\/p>\n
OMAHA, Neb. (AP) CSX's new chief executive is defending the restructuring progress made in the first four months since he was hired to lead a turnaround of the railroad. <\/p>\n
CEO Hunter Harrison, who's previously led turnarounds at three other railroads, says he's pleased with the improvement so far. <\/p>\n
\"I thought we had a hell of a quarter,\" Harrison said Wednesday. <\/p>\n
The Jacksonville, Florida-based railroad has taken nearly 900 locomotives and 60,000 freight cars out of service and laid off 2,300 people this year. Harrison said those changes haven't all paid off yet. <\/p>\n
Changing the operating the model a railroad uses is difficult because everyone who works there is used to operating a certain way. Harrison said the level of resistance is about what he expected. <\/p>\n
CSX is working to eliminate infrastructure it doesn't need and consolidate operations. That includes shutting down most of the railroad's 12 railyards to eliminate redundancy. <\/p>\n
The railroad will also consolidate all of its dispatching into one central location instead of the current nine early next year. <\/p>\n
But Wall Street appeared disappointed with CSX's guidance for the rest of the year, and the railroad's shares fell 5.1 percent, or $2.77, to close at $51.87 Wednesday. <\/p>\n
CSX reiterated that it's on track to achieve a forecast 25 percent improvement in earnings per share this year. Analysts surveyed by FactSet had been predicting adjusted annual earnings per share this year of $2.29. <\/p>\n
The 72-year-old Harrison was hired by CSX in March after pressure from the Mantle Ridge hedge fund that owns 5 percent of the railroad. Harrison previously led turnarounds of Canadian Pacific, Canadian National and the Illinois Central railroads. <\/p>\n
CSX Corp. said Tuesday that its second-quarter net income improved 15 percent to $510 million, or 55 cents per share, as it hauled 2 percent more freight. That's up from $445 million, or 47 cents per, share a year ago. <\/p>\n
Coal was somewhat of a bright spot in the quarter with a 7 percent increase the volume CSX hauled. But demand for coal has crumbled over the past several years because natural gas has been so cheap and environmental concerns have been growing <\/p>\n
Harrison offered a bleak long-term outlook for the fuel Wednesday and said he wouldn't make any major investments to haul coal. <\/p>\n
\"Fossil fuels are dead. That's a long-term view,\" Harrison said. \"It's not going to happen overnight. It's not going to be two or three years, but it's going away in my view.\" <\/p>\n
The railroad's quarterly results were weighed down by $122 million in restructuring charges. Without those charges, the railroad said it would have reported earnings per share of 64 cents. <\/p>\n
Most of the $122 million restructuring charge in the second quarter was related to Harrison's hiring. CSX agreed to cover $84 million in compensation that Harrison forfeited at Canadian Pacific when he retired early. Shareholders approved those payments last month. <\/p>\n
CSX operates more than 21,000 miles of track in 23 Eastern states and two Canadian provinces. <\/p>\n
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