CSX profits jump after cutting costs
CSX Corp. delivered a 72 percent jump in its second-quarter profit as the railroad continues to cut its expenses and improve operations.
The Jacksonville, Florida-based company said Tuesday that it earned $877 million, or $1.01 per share in the quarter. That's up significantly from last year's $510 million, or 55 cents per share, when an $81 million restructuring charge limited profit.
The results from the latest quarter handily exceeded the 86 cents per share expected by analysts surveyed by Zacks Investment Research. Shares in CSX were up about 3 percent in after-hours trading following the report.
CSX is more than a year into an operational overhaul that began under previous CEO Hunter Harrison, who died in December. His successor, Jim Foote, is continuing to implement the plan to allow CSX to handle more volume with fewer locomotives and employees by operating on a tighter schedule.
"While we remain in the early stages of the transformation I am more confident this exceptional team can deliver on our longer term outlook," Foote said.
The freight railroad generated revenue of $3.1 billion in the period as it handled 2 percent more volume. Seven analysts surveyed by Zacks expected revenue of $2.99 billion.
Foote said CSX now expects revenue for the full year to be up by a mid-single-digit rate. Previously the railroad had predicted just a slight increase in revenue.
Through the end of regular-session trading Tuesday, CSX shares have increased 17 percent since the beginning of the year, while the Standard & Poor's 500 index has climbed 5 percent.
First Tennessee grows, but spring profits down
Tennessee's biggest bank holding company reported lower profits in the second quarter but projected that the recently completed merger with a major North Carolina bank should boost profits next year.
First Horizon National Corp. , the parent company of First Tennessee Bank, said Tuesday it earned nearly $81.6 million, or 25 cents per share, in net income in the three months ended June 30. In the same period a year ago, First Horizon earned $90.8 million, or 38 cents per share.
Earnings when adjusted for non-recurring costs equaled 36 cents per share, which was in line with the average estimate of 10 analysts surveyed by Zacks Investment Research.
After its second quarter results were released, First Horizon shares dropped nearly 4 percent Tuesday to close at their lowest level since last summer.
First Tennessee said it completed its systems integration this spring with Capital Bank, the Charlotte, N.C.-based bank acquired by First Tennessee last year for $2.2 billion. The merger makes First Horizon the fourth biggest regional bank in the Southeast with more than $40 billion in assets and over 350 bank offices in Tennessee, North and South Carolina, Florida, Mississippi, Georgia, Texas and Virginia.
First Horizon projects the merger should boost earnings next by an 17 percent. First Tennessee expects to achieve $25 to $30 million of revenue synergies and $85 million of annual run-rate cost savings by 2019 through the merger with Capital Bank.
"With the integration complete, our focus is on driving organic growth, strengthening our presence in attractive markets in the Southeast, achieving operational efficiencies and building on the momentum in our profitable specialty businesses," First Horizon CEO Bryan Jordan said.
In Chattanooga where First Tennessee Bank is the largest bank with nearly $2.5 billion in local deposits, Chattanooga Market Leader Jeff Jackson said net revenue was up 7 percent and net income jumped by 39 percent over last year. In addition, the bank has seen an increase of 4 percent for loans made with net charge-offs being at an all-time low.
UnitedHealth earnings jumps by 28 percent
Profit jumped by 28 percent at UnitedHealth Group during the second quarter as the nation's largest health insurer topped earnings estimates and once again boosted financial guidance for the year.
The Minnetonka, Minn.-based health care giant posted earnings of $2.92 billion on $56.1 billion in revenue, which was about 12 percent ahead of revenue during the year-ago quarter.
Adjusted earnings per share of $3.14 exceeded by a dime the $3.04 per share expected among analysts surveyed by Thomson Reuters. It was the sixteenth consecutive earnings beat.
On Tuesday, UnitedHealth Group said it now expects adjusted net earnings to a range of $12.50 to $12.75 per share.
At the end of last year, UnitedHealth Group employed about 260,000 people worldwide.
Fuel spike cuts United earnings
Rising fuel prices are cutting into profit at United Airlines, although strong travel demand is helping the airline cope by pushing travelers' prices higher as the summer travel season hits full speed.
United reported Tuesday that second-quarter profit was $684 million, down 17 percent from a year ago. But that was higher than analysts expected, and United raised its earnings forecast for the rest of 2018.
Planes are full for much of the day, giving United more pricing power. United said that passenger revenue per seat and per mile - a stand-in for fares and fees - rose 3 percent over a year earlier.
Passengers should brace for more price increases.
United predicted that the stand-in figure for average prices will rise by between 4 percent and 6 percent through September.
The airline also slightly reduced its planned growth for the rest of the year in response to rising fuel prices. That seemed to signal United's willingness to eliminate flights that are only marginally profitable with current fuel prices - something investors are pushing airlines to do.
The spot price of fuel has jumped more than 50 percent in the past year, according to Energy Department figures. United's second-quarter fuel bill was $2.39 billion, up 43 percent in one year.