CSX Corporation (NASDAQ:CSX), the third largest railroad operator, posted a worse-than-expected decline in fourth quarter revenue following service disruptions that occurred during an overhaul under former chief executive Hunter Harrison.
Revenue fell 6% to US$2.86bn in the quarter to 31 December, missing analysts’ estimates of US$2.89bn. Freight volumes declined 8% due to lower shipments of some hauls, including of vehicles and chemicals.
Aggressive timeline for changes to blame
Harrison died in December just eight months into his restructuring programme, which involved running trains on tight schedules, job cuts and rail yard closures. The strategy caused service disruptions that caused CSX to lose business.
Jim Foote, who took over as chief executive last month, said the aggressive timeline to implement the changes is what caused the issues but the company has started to win back business.
He plans to continue to carry out Harrison’s strategy, with whom he worked previously on the overhaul of Canadian National Railway Co.
“I see no reason to believe we can’t deliver the results that Hunter thought we could,” Foote said.
Net income for the fourth quarter rose to US$4.14bn, or US$4.62 per share, from US$458mln, or 49 cents per share, driven by a US$3.6bn benefit tied to the new US tax legislation.
Shares fell 1.89% to US$58.1 each in early US trading.