CSX Projects Another Revenue-Challenging Year in 2020
January 16 2020 - 5:24PM
Dow Jones News
By Maria Armental
Freight rail operator CSX Corp. (CSX) projects expects another
challenging year in 2020, following a steeper-than-expected 3%
revenue decline this year.
CSX, which operates one of the two major freight railroads east
of the Mississippi River, has been overhauling operations through a
series of cost cuts, modeled on the late railroad executive Hunter
Harrison's "precision-scheduled railroading" principles, that have
helped it sustain its financial performance even as shipment
volumes and revenue have fallen.
Jacksonville, Fla.-based CSX on Thursday posted a record
operating ratio of 58.4% for 2019, slightly better than analysts
had projected.
It is an efficiency level record among the largest U.S.
freights, CSX said, adding this year it expects it to come in at
about 59%.
Operating ratio is a key metric for railroads that measures the
proportion of operating revenue consumed by operating expenses.
"Our service is the best it has ever been and getting better,"
Chief Executive Jim Foote said in a conference call with
analysts.
"The key here is reliability," Mr. Foote said, touching on one
of the challenges for railroad companies: winning back
customers.
"By operating a simpler, more efficient network," Mr. Foote
said, "we are able to offer rail users a service that is truck-like
in consistency, but with lower cost and more environmentally
responsible."
Volume fell a steeper-than-expected 7% in the December quarter,
including a double-digit decline in coal.
Company officials have noted that the business environment
remains soft and warned that CSX would face difficult comparisons
for the first half of the year.
"It took industrial activity a while to cool off, and it will
take a while to heat back up," Mr. Foote said Thursday.
Overall, CSX reported a 9% profit decline and 8% revenue decline
for the December quarter.
It ended the year at with profit up 1% at $3.33 billion, or
$4.17 a share, on $11.94 billion in revenue.
This year, it expects revenue to remain flat to down 2% and
expects capital expenditures to remain at roughly $1.6 billion to
$1.7 billion.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
January 16, 2020 17:09 ET (22:09 GMT)
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