CSX Profits Fell 10% in 3rd Quarter

Falling traffic led to CSX posting a 10 percent decline in profits for the third quarter of 2016.

CSX logo 1CSX reported net earnings of $455 million, or 48 cents per share, down from $507 million in the third quarter of 2015.

However, the results still exceeded Wall Street analyst expectations of 45 cents per share. Revenue for the quarter fell 8 percent, the same as its decline in overall traffic volume.

Trains magazine said CSX experienced the largest traffic decline among Class I railroads.

The carrier saw a 21 percent decline in coal, a 13 percent drop in metals and equipment, and a 10 percent decline in agricultural and food products. CSX realized gains in automotive (6 percent) and fertilizers (1 percent).

Although intermodal volume fell by 7 percent, CSX said the bulk of its domestic intermodal business remained strong, reflecting the success of the railroad’s highway-to-rail conversion program. International intermodal volume fell 12 percent due to the loss of a contract to NS as well as weaker global trade.

The operating ratio was up a tick at 69 percent compared with 68.3 percent in the third quarter of 2015.

“CSX continues to drive strong cost performance and efficiency in this dynamic market environment while meeting or exceeding customer expectations,” CEO Michael Ward said in a statement.

The railroad expects fourth-quarter traffic volume to be about even with last year, Chief Financial Officer Frank Lonegro said during a conference call.

During the third quarter this year, CSX said its expenses improved 7 percent and that it expects efficiency gains and cost savings of $400 million for the year, up from the $350 million target management provided during the second quarter.

However, Chief Operating Officer Cindy Sanborn said CSX won’t be able to duplicate this “extraordinary” savings pace next year.

“We’ll see a more normal year next year, but we’re not leaving anything on the table,” she said.
CSX expects efficiency gains of $150 million in 2017.

On-time performance, terminal dwell time and system velocity all fell slightly compared with the second quarter of this year.

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