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CHICAGO (Reuters) - No. 3 U.S. railroad CSX Corp (CSX.O) on Wednesday reported a lower quarterly net profit that was hurt by an 8 percent drop in revenue and freight volumes, but came in above market expectations and sent its stock up nearly 3 percent.
"Our financial results demonstrate CSX’s ability to deliver value for shareholders and customers in the current business climate," Chief Executive Officer Michael Ward said in a statement.
The company said coal, which has long been a large and lucrative piece of business for major U.S. rail companies, continued its slide with volumes down 21 percent and revenue off 20 percent in the three months ended Sept. 30.
Railroads have been hoping for a bottom to the slide in coal that began in late 2014, as low energy prices encouraged utilities to switch to burning cheaper natural gas. Coal exports have also been hurt by the strong U.S. dollar.
CSX reported a drop in revenue for all the goods it hauls, with the exception of automotive shipments, where revenue was up 6 percent thanks to continued robust U.S. auto sales.
Last week, sections of CSX's network were closed due to Hurricane Matthew, though the financial effects of delays and any damage caused will not be known until it posts fourth-quarter results in January.
The Jacksonville, Florida-based railroad reported third-quarter net income of $455 million or 48 cents per share, down nearly 8 percent from $507 million or 52 cents per share a year earlier.
Analysts had on average expected earnings per share of 45 cents.
The company said that its operating ratio - or its operating expenses as a percentage of revenue, a key metric for Wall Street analysts and investors - worsened in the quarter, rising 70 basis points to 69 percent.
The company said it was working on network and technology improvements, plus seeking new business to drive down its operating ratio to the mid-60s in the long term.
Revenue was down 8 percent at $2.7 billion from $2.94 billion a year earlier.
In post-market trading CSX shares were up 2.6 percent at $31.
Reporting by Nick Carey; Editing by Sandra Maler and Lisa Shumaker