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CSX Corp. (CSX) To Invest $2.3B In 2013 To Meet Long-Term Freight Rail Demand

 January 23, 2013 12:58 PM

(By Balaseshan) CSX Corp. (NYSE: CSX), which provides rail, intermodal and rail-to-truck transload services, said it intends to invest about $2.3 billion in its business in 2013 that will fund critical network enhancements and fleet upgrades.

The investments will support initiatives to help meet the nation's long-term demand for freight rail, improve customer service and further the company's plans for long-term profitable growth.

These investments are part of the company's balanced approach to capital deployment, which also includes dividends and share repurchases.

Long-term increases in demand are expected to occur due to an increase in the population and its consumption, global trade, more congested highways, increasing momentum in reindustrialization, and a rise in awareness of the environmental benefits offered by rail.

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The investments are also expected to include $325 million associated with the implementation of the industry's Positive Train Control program.

On Tuesday, the company reported fourth-quarter earnings of $443 million or $0.43 per share, compared to $457 million or $0.43 per share last year. Total revenue declined 2% to $2.9 billion, due to lower volume partially offset by pricing gains and higher fuel surcharge recoveries.

The company saw an increase in merchandise and intermodal shipments, but these gains were more than offset by declines in coal resulting from low natural gas prices, high coal inventory at utilities and lower global demand.

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As a result of the lower revenue, which was partially offset by strong efficiency gains, operating income declined 4% to $804 million and the operating ratio increased 60 basis points to 72.1%.

The company reportedly expects flat first-quarter volumes on a year-over-year basis and 2013 U.S. coal shipment to decline 5% to 10%, compared with a 29% drop in 2012.

CSX is trading up 4.23% at $21.69 on Wednesday. The stock has been trading between $18.88 and $23.49 for the past 52 weeks.

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