CSX Chief Vows to Win Back Lost Business After Service Woes

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)