CSX Profit Declines; Merger Rumors Intensify

CSX reported a 14% decline in second-quarter profit to $829 million ($0.44 per share), with both profit and revenue meeting analyst expectations despite flat shipment volumes. Revenue dropped 3.4% year over year to $3.57 billion, while operating margin fell to 35.9% and free cash flow turned negative at -$164 million. Intermodal shipping volumes rose 2%, contributing 14% to overall revenue, and shares increased 2% in after-hours trading. The company continues to invest in major infrastructure projects, including a tunnel expansion in Baltimore and hurricane repairs. Broader cyclical downturns in the rail industry have resulted in modest long-term revenue growth for CSX and its peers. Speculation about industry consolidation is growing, with CSX reportedly exploring options amid rumors of BNSF's interest and Union Pacific's talks to acquire Norfolk Southern, though any deals would face rigorous regulatory review.