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CSX Dividend Up 30 Percent After Strong Quarter

Posted on: Thursday, 27 October 2005, 21:00 CDT

By Timothy J. Gibbons, The Florida Times-Union, Jacksonville

Oct. 27--CSX Corp. increased its quarterly dividend by 30 percent Wednesday following a quarter in which its surface transportation business set operating income records despite the destruction of Hurricane Katrina.

The Jacksonville-based railroad company will pay a 13 cents-per- common share dividend in December, a move the company took to more closely align its dividend yield with its competitors.

CSX has a 12-month yield -- the amount of the dividend divided by the cost of the stock -- of .89 percent, below the 1.72 percent enjoyed by industry leader Union Pacific Corp. or the 1.15 percent posted by competitor Norfolk Southern Corp.

The increase from a dime-a-share dividend is designed to attract more investors and reward long-time shareholders, said Michael Ward, chief executive officer of the company. "We thought we'd share our better results with the shareholders," Ward said.

Those results included net earnings of $164 million, or 72 cents per share, up 31 percent from the year-ago quarter earnings of $123 million, or 55 cents per share.

Earnings were bolstered by a 9 percent increase in surface transportation revenue, which increased to $361 million, the 14th consecutive quarter of revenue growth.

The company's operating ratio, a standard industry measure that compares operating revenue to income, dropped slightly more than four percentage points, a positive change.

Much of the increase in revenue came from coal shipments, which Ward said the company expects to continue to be a strong revenue source into next year, as well as growth in revenue from general merchandise shipments. Several merchandise categories, such as forest products and metals, saw an increase in revenue despite a drop in volume as the company has moved away from low-margin shipments, Ward said.

The strong results from the quarter, which closed Sept. 30, came despite the company suffering $250 million in damages from Katrina, which took about 100 miles of track to the east of New Orleans out of service.

CSX's yard in New Orleans is already back in operation, and most of the track will return to service by the end of the year, with four of the five bridges that were washed out being repaired in the next two months. The largest of the spans -- the Bay St. Louis Bridge -- will not be back in operation until the first quarter of 2006, chief operating officer Tony Ingram said during a conference call.

The company's stock closed at 44.56, down 32 cents.

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CSX, UNP, NSC,

Source: The Florida Times-Union

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