CSX Corporation (NASDAQ:CSX) stock rose 4.05% (As on Apr 21, 11:34:46 AM UTC-4, Source: Google Finance) after the company beaten the topline estimates for the first quarter of FY 22. Merchandise revenue increased 6% on 2% lower volume, a strong pricing gains and higher fuel surcharge revenue more than offset the volume decline. Current demand remained strong across most merchandise markets with shippers prioritizing environmental benefits of rail and pursuing lower cost options to offset inflation. The ongoing semiconductor shortage impacted automotive volumes through the quarter. Intermodal revenue increased 13% on 1% lower volume as truck conversions drove domestic growth, offsetting declines in the international market that continues to be impacted by supply side constraints. Intermodal demand remains strong but continues to be challenged by takeaway capacity and equipment shortages including chassis. Coal revenue increased 39% on 10% lower volume. Export coal revenue increase was driven by higher benchmark prices partially offset by lower domestic and international thermal coal shipments. First quarter coal volumes were impacted by several factors, including mine disruptions and an outage at the Curtis Bay export facility.

CSX in the first quarter of FY 22 has reported the adjusted earnings per share of 39 cents, which is inline with the analysts’ estimates for the adjusted earnings per share of 39 cents. The company had reported the adjusted revenue growth of 21 percent to $3.41 billion in the first quarter of FY 22, beating the analysts’ estimates for revenue of $3.34 billion. This is due to an overall revenue-per-unit increase of 24% more than offset a 2% decline in volume. Operating income of $1.28 billion increased 16% compared to the prior year. Operating ratio increased by 150 basis points to 62.4%, including the impacts of the acquisition of Quality Carriers and higher fuel prices. First quarter operating income included $17 million of expense related to increases in environmental reserves and a $20 million gain from property sales recognized from the 2021 transaction with the Commonwealth of Virginia.

Moreover, the total costs increased $419 million or 24% in the quarter, but were in line with our expectations outside of the spike in fuel price. The acquisition of Quality Carriers represented approximately $215 million of expense. Higher fuel prices were also a significant factor, up about $110 million versus last year. All other expenses increased approximately $95 million, driven by inflation as well as ongoing costs related to supply chain congestion and network fluidity.