18 Oktober 2014

[181014.EN.BIZ] CSX Profit up 12pc as Canadian Pacific Reported Bid to Buy is Rebuffed

THE third biggest US railway, CSX Corp, posted a record third quarter 12 per cent profit increase to US$509 million, drawn on revenues of US$3.2 billion, up eight per cent.

The Jacksonville-based railway's results were driven by a seven per cent increase in freight volumes as the US economy continued to grow.

The company expects modest earnings growth for the full year, but anticipates double-digit growth and higher profit margins in 2015.

The Wall Street Journal reported that CSX had rebuffed a takeover bid from Canada's second railway, the Canadian Pacific (CP), to create a transcontinental carrier worth $62 billion.

But analysts told Reuters that such a deal would face insurmountable regulatory barriers from the US Surface Transportation Board (STB).

CSX said it would stay focused on "growing faster than the economy," raising prices above inflation and making strategic investments, said CEO Michael Ward.

As for the take-over bid report, CP spokesman Martin Cej and CSX spokeswoman Melanie Cost told Reuters their companies did not comment on market rumours.

Calgary-based CP has said it is interested in acquisitions as rail traffic surges on the back of the North American energy boom.

Said CP chief executive Hunter Harrison: "Would we ever consider anything? As I've said publicly before, sure. But you got to have somebody to dance with and I don't know anybody that wants to dance now."

Mr Harrison, a former CEO of rival Canadian National Railway, was at the CN helm when it tried to merge with Burlington Northern Santa Fe, wnich dominates the Pacific Northwest and rivals the Omaha-based Union Pacific for traffic west of the Mississippi.

That deal - the last attempted merger between two big railways - was stopped in 2000 by the STB because of competition concerns.

CP, Canada's No 2 railway by revenue, has a market value of $32 billion, while CSX, is worth $30 billion.

Source : HKSG.

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