CSX Chief Vows to Win Back Lost Business After Service Woes
October 17 2017 - 2:07PM
Dow Jones News
By Paul Ziobro
CSX Corp. Chief Executive Hunter Harrison said the railway
expects to win back any market share lost during the summer and
sought to reassure investors that service problems were
resolved.
Speaking Tuesday on the company's third-quarter earnings call,
Mr. Harrison once again blamed poor execution of his so-called
precision scheduled railroading plan for congestion, delays and
erratic service in July and August. Customers scrambled to ship
goods by truck and, where possible, a competing railroad to keep
orders flowing and factories running.
Mr. Harrison said that any lost business should shift back
"immediately" once the service is sorted out.
"This is about who's got the best product, who's got the lowest
price," Mr. Harrison said. "We think we're going to be there."
The service problems hit a number of industries including
producers of chemicals and coals, auto manufacturers and food
companies, and culminated in a hearing before federal railroad
regulators last week.
They also softened third-quarter results, as revenue rose just
1% in the period as pricing rose 3.5% on a slight increase in
volume. Earnings rose to $459 million, or 51 cents a share,
matching the average forecast by analysts.
The company did back its forecast for the year, which was
lowered last month to account for the service problems and
weather-related impacts. Shares of CSX rose 1.6% Tuesday afternoon
to $53.68, leaving them up nearly 50% on the year.
CSX is making some changes in the wake of the problems. Mr.
Harrison said the railway "changed some procedure" in response to a
major derailment in Pennsylvania that occurred along a steep
stretch of track. Mr. Harrison also has reinstituted so-called
"Hunter Camps," workshops where he teaches CSX personnel about his
railroad operating philosophy.
Mr. Harrison and other top CSX executives will look to share a
deeper outline of the long-term plans for the railway later this
month during a daylong investor conference.
The company may also offer more clues into one of the top
concerns for investors: succession planning. The 72-year-old Mr.
Harrison frequently uses an oxygen tank to manage an undisclosed
medical condition. Analysts say much of the fortunes of CSX are
tied to Mr. Harrison overseeing the turnaround as well as
identifying a suitable candidate to take the reins when his term is
up.
"I am hopeful that maybe we can give you more insight at the
analyst meeting, but I'm not sure of that," Mr. Harrison said,
adding that succession planning is "something that we will stay on
top of and grind away at."
Write to Paul Ziobro at Paul.Ziobro@wsj.com
(END) Dow Jones Newswires
October 17, 2017 13:52 ET (17:52 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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