OMAHA, Neb. – CSX Corp. reported a nearly 20 per cent drop in second-quarter profit as freight volume slowed 9 per cent, but the railroad beat expectations by cutting expenses and raising rates where it could.
The Jacksonville, Florida-based railroad said Wednesday it earned $445 million, or 47 cents per share, in the quarter. That’s down from $553 million, or 56 cents per share, a year ago.
Analysts surveyed by FactSet expected CSX to earn 44 cents per share on $2.68 billion in revenue.
Revenue declined 12 per cent from last year’s $3.06 billion to $2.7 billion because of the volume decline. Coal shipments fell 34 per cent, extending its prolonged decline.
Coal demand has plummeted over the past several years as the utilities that could switched fuels to natural gas take advantage of low gas prices or shut down coal plants ahead of new pollution regulations. Utility demand has largely stabilized, but now the export coal market is also weak.
Edward Jones analyst Logan Purk said CSX is doing a good job of responding to weak freight demand, falling coal shipments and reduced fuel surcharge revenue.
“They’re managing well through what has been an extremely challenging environment,” Purk said.
CSX reiterated that the railroad expects its earnings and total volume to decline in 2016.
The railroad cut its expenses 9 per cent in the quarter in response to the slower shipping volume.
“In this environment, the company continues to right-size resources while making strategic investments to transform the company and capitalize on market opportunities to drive long-term value creation,” said Michael Ward, CSX’s chairman and CEO.
CSX operates more than 21,000 miles of track in 23 Eastern states and two Canadian provinces.
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CSX Corp.: www.csx.com