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UPDATE 1-Railroad operator CSX's revenue misses as shipments fall

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Jan 16 (Reuters) - CSX Corp reported lower-than-expected revenue for the fourth quarter due to a drop in shipments, but beat Wall Street's earnings targets on better prices and cost controls, capping a tumultuous year for the third-largest U.S. railroad operator.

Hunter Harrison, CSX's former chief executive and a veteran railroader cherished by investors for leading turnarounds of Canadian railroads, died in December, just eight months into his restructuring campaign at CSX.

Investors have been searching for clarity on how new CEO Jim Foote will handle Harrison's turnaround plan that includes deep job cuts and rail yard closures and triggered persistent service disruptions, customer complaints and federal scrutiny.

"CSX's performance continued to strengthen in the fourth quarter, building upon the scheduled railroading model that was instituted by Hunter Harrison," Foote said in a statement.

The company's stock, which hit a record high in regular trading, was down 0.64 percent after the bell.

CSX said its freight volumes dropped 8 percent in the quarter ended Dec. 31, hurt by lower shipments of commodities it hauls, such as vehicles and chemicals.

The Jacksonville, Florida-based railroad said revenue fell 6 percent to $2.86 billion from a year earlier, which included an extra week.

That missed analysts average estimate of $2.89 billion, according to Thomson Reuters I/B/E/S.

However, the railroad's operating ratio, a closely watched measure of operating costs as a percentage of revenue, fell to 60.9 percent from 67 percent. A lower operating ratio shows improvement in profitability.

On an adjusted basis, CSX earned 64 cents per share, beating analysts' estimate of 56 cents.

Net income jumped to $4.14 billion, or $4.62 per share, from $458 million, or 49 cents per share, boosted by benefits from the recently enacted U.S. tax overhaul. (Reporting by Eric M. Johnson in Seattle and Arunima Banerjee in Bengaluru; Editing by Savio D'Souza)