CSX Corp. said Tuesday that profit rose 4.5% during its latest
quarter, though falling coal volume weighed on revenue, which
retreated 5.5% and came in below analysts' estimates.
The Jacksonville, Fla., railroad company beat its own
expectations for earnings, helping send shares 3.5% higher after
hours.
Low fuel costs helped the rail company slash expenses to $2.04
billion from $2.24 billion during the same period a year ago. Coal
volume was down 11% in the latest quarter, with metals falling 18%.
Five percent increases in the automotive and intermodal segments
help offset weakness in other areas.
The Jacksonville, Fla., railroad company has been facing the
same headwinds as much of the sector, as cheaper natural gas prices
have cut into the coal market domestically, while a strong U.S.
dollar has dented exports. On average, rail companies earn about
15% of revenues from coal, while for CSX it is about 20%.
Also on Tuesday, CSX cut its forecast for domestic coal volume,
seeing a dip of about 10% for 2015, with the outlook for export
coal volume remaining at about 30 million tons. Last month, CSX's
Chief Financial Officer Fredrik Eliasson said he expected annual
domestic coal volume to be down at least 5%.
For the quarter, CSX reported a profit of $553 million, or 56
cents a share, compared with $529 million, or 53 cents a year
earlier. Revenue for the latest quarter fell to $3.06 billion, down
from $3.24 billion last year.
The company had expected earnings for the latest quarter in the
range of 53 cents per share to 54 cents per share. Analysts
surveyed by Thomson Reuters had expected revenue to retreat 4% to
$3.12 billion.
According to data from the Association of American Railroads,
across the industry coal carloads are down 9.4% for the year to
date through July 4 compared with the same period 2014 while
metallic ores and metals carloads dipped 5.9%. Total carloads are
down 3.9%, offset slightly by a rise of 2.7% in total intermodal
units, or shipments that use an additional means of transport like
ship or truck along with rail.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
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