UPDATE 1-CSX sees further gains from economic recovery

* Sees growing volumes in third quarter

* Coal business seen continuing to improve

* Sees hiring 500-1,000 workers

(Updates with late afternoon share movement)

By Carey Gillam

KANSAS CITY, July 13 (BestGrowthStock) – Railroad company CSX Corp
(CSX.N: ) expects to build on its better-than-expected
second-quarter profit (Read more your timing to make a profit.) with good gains in the current quarter,
as the economic recovery gains momentum, company officials said
on Tuesday.

“Each quarter we see a little more strength,” said CSX
Chairman Michael Ward. “As we look to the second half of the
year, we think almost all our major markets are going to
continue to see that gradual recovery. We expect to have a very
good 2010.”

Still, the shares of the Jacksonville, Florida-based
company traded both ways on Tuesday. After initially rising on
the earnings report, the shares dropped 3 percent to $50.80 and
were off 48 cents at $51.98 in late afternoon trading.

Analysts noted that CSX officials said the second quarter
results were likely a high point for the year as a reason for
weakness in the shares.

CSX reported late on Monday that net income for the
railroad, one of the largest in the United States, rose 36
percent in the second quarter, beating analysts’ expectations.

Volume improved across the varied markets the company
serves and revenue grew 22 percent to nearly $2.7 billion.

Company officials said they were seeing evidence the
industrial economy was expanding as inventories remain low.

Strong growth is seen in the company’s intermodal business,
both internationally and domestically, and increased automotive
production should spur higher shipping volumes related to that
sector, Ward said. Automotive volume jumped 63 percent in the
second quarter.

“That drives some related industries like metals and
chemicals that go into the production of automotive,” he said.

Company officials said CSX’s coal business was on the rise,
with coal revenue up 26 percent in the second quarter. Coal
volume should continue to be helped by increased Asian export
demand and higher industrial demand even as utility demand
remains stagnant due to high stockpiles, the company said.

One notable negative continues to be the housing market.

But overall, CSX officials are so confident in what appears
to be an improving economy that they plan to hire 500 to 1,000
workers in the next year.

“We will start doing some selective hiring in the second
half,” Ward said.

Dahlman Rose analyst Jason Seidl said the CSX results bode
well for other U.S. railroads and for the economy overall.

“I hope CSX (results) put some confidence back in investors
in terms of the railroads and their ability to grow,” Seidl
said.

CSX said net income for the second quarter was $414
million, or $1.07 per share, compared with $305 million, or 77
cents a share, in the same period last year.

Not counting discontinued operations, earnings rose 47
percent and earnings per share were up 51 percent from a year
earlier.

Analysts on average were expecting 98 cents a share,
according to Thomson Reuters I/B/E/S.

Revenue growth and continued operating leverage drove
record operating income of $768 million and an operating ratio
of 71.2 percent.
(Reporting by Carey Gillam; editing by John Wallace and Andre
Grenon)

UPDATE 1-CSX sees further gains from economic recovery