CSX warns it will be hard to hit profit goals for year
OMAHA, Neb. (AP) — CSX expects faltering demand for coal and crude oil to slow profit growth this year and the railroad plans to lay off roughly 1 percent of its workers to adjust.
Railroad executives said Wednesday that CSX is improving its efficiency and raising prices, but it will be difficult to deliver results near the upper end of their forecast for mid-to-high single-digit earnings per share growth in 2015.
CSX predicted relatively flat third-quarter profit with slower volume and continued weak energy demand. Coal volume is expected to drop 15 percent as export demand remains weak and U.S. utilities have large coal stockpiles on hand. Plus, drilling for natural gas and crude oil has slowed because of the current low prices.
Railroads have been dealing with relatively weak coal demand for several years because low natural gas prices and concerns about pollution regulations prompted many utilities to switch from coal to gas.
Citi Research analyst Christian Wetherbee said in a note to investors that CSX's results were better than expected. One of the most impressive figures was CSX's ability to increase prices 3.5 percent overall in a challenging environment.
S&P Capital IQ analyst Jim Corridore said he expects CSX revenues to remain weak during the second half of the year, but he expects the railroad to continue delivering solid operating cost performance.
CSX shares gained 54 cents, or 1.7 percent, to sell for $32.61 in morning trading Wednesday.
The Jacksonville, Florida, company this week reported second-quarter profit of $553 million, up from $529 million, last year.
Revenue fell 6 percent to $3.06 billion.
CSX's profit beat the 53 cents per share that analysts surveyed by Zacks Investment Research were expecting, but revenue fell short of the forecast of $3.14 billion.
CSX Corp. operates more than 21,000 miles of track in 23 Eastern states and two Canadian provinces.