CSX Revenue Falls 12% as Coal Shipments Continue to Slip
July 13 2016 - 3:22PM
Dow Jones News
By Ezequiel Minaya
CSX Corp. said Wednesday that revenue for its second quarter
fell 12% as falling coal shipments -- a key business for freight
lines -- continued to pressure the railroad operator.
Shares of CSX, though, rose 4.6% to $28.25 in late afternoon
trading as company's earnings topped expectations. The stock is now
up 9% for the year.
The Jacksonville, Fla., company released its earnings report
more than an hour earlier than expected to correct "information
released via Twitter earlier today." Further details about the
early release or the other information on Twitter weren't
immediately available.
CSX has struggled over the past two years as sagging demand for
coal, amid plunging energy prices and a strong U.S. dollar, has cut
into rail traffic.
For the latest quarter, coal volume for CSX was down 30%. The
company has said it expects the market to remain challenging, with
coal volumes down about 25% for the year.
"The environment that we see is really typified by low natural
gas prices, low commodity prices and a strong U.S. dollar, and we
expect those to continue even though we had seen some small
moderation in those in the past few weeks," CSX Chief Financial
Officer Frank Lonegro said in May at an industry conference,
according to a FactSet transcript.
Wednesday, CSX said it expected 2016 full-year earnings per
share to decline, reflecting the continuing transition in the
energy markets, along with the effect of the strong U.S. dollar and
low commodity prices. The company, though, didn't provide a
specific forecast.
CSX has, however, met or exceeded earnings expectations over the
past three quarters, having responded to sector turmoil with
tightening efficiency that has included layoffs and the mothballing
of trains.
For the quarter ended July 13, CSX reported a profit of $445
million, or 47 cents a share, down from a year-ago profit of $553
million, or 56 cents a share.
Revenue fell 12% to $2.7 billion.
Analysts surveyed by Thomson Reuters expected earnings to
decline 21% to 44 cents a share on revenue of $2.7 billion.
According to the Association of American Railroads, U.S.
carloads through the past six months fell 12.5% compared with the
same period last year, with coal carloads plunging 30.2%. Petroleum
and associated products also dragged on the traffic tally, falling
21.6%.
Hopes that intermodal traffic -- the hauling of shipping
containers -- would help offset the drop-off in other categories,
haven't quite been met. Total intermodal units fell a modest
2.7%.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
July 13, 2016 16:07 ET (20:07 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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