CSX Reports Lower Earnings In Fourth Quarter But Matches Analyst Forecasts
CSX Corp. reported weaker earnings in the fourth quarter than the same period in 2015, although the freight carrier met analyst estimates compiled by Bloomberg News.
The Class 1 railroad reported $458 million in profits, or 49 cents per share, for the three-month period that ended Dec. 31. Results are down 2% from the $466 million CSX earned during the same period in 2015.
However, the decline in profits can be attributed to higher income taxes and a debt repurchase charge rather than less profitable operations. Revenue, for example, rose 9% to $3 billion during the fourth quarter, and operational income, or the amount remaining after expenses are deducted, rose 27% to $1 billion.
CSX recorded a $115 million debt repurchase charge, or 8 cents per share, when it chose to buy back notes that were due to mature in the next three calendar years.
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“In an environment where the company lost almost $470 million of coal revenue and experienced weakness across most of its markets, CSX delivered nearly $430 million of productivity savings in 2016 while improving customer service,” Chairman and CEO Michael Ward said.
Intermodal volume and revenue generally corresponded to a trend that industry analysts said shows a turnaround that began in the fourth quarter.
For the full year, intermodal revenue dropped 2% to $1.73 billion, volumes dropped 1% compared with 2015 and revenue ton miles dropped 1%. But in the fourth quarter, revenue increased 7% to $477 million, volume rose 4% and revenue ton miles jumped 8%.
Total shipments reflected a similar reversal in fortunes in the last three months of the year. For the full year, revenue fell 6% to $11 billion, and shipments dropped 5%. Coal fared the worst as revenues dropped 20% and volume 21% in 2016 versus 2015.
However, along with the revenue increase in the fourth quarter, total volume rose 5%. Coal revenues in the three-month period improved 23% to $551 million, and volume improved 8%.
The operating ratio in the quarter was 67%, an improvement from 71.6% for the same period in 2015. For the full year, the ratio improved 30 basis points to 69.4%.
CSX earnings matched the analyst forecasts on earnings and beat them on revenue and operating income.
