CSX cuts Q4 2016 earnings expectations

Cindy Sanborn, chief operating officer of the Class I railway, told investors and analysts at the Baird 2016 Industrial Conference in Chicago the company expects an $0.08 impact to fourth quarter earnings per share due to costs from debt refinancing.    CSX Corp. has updated its projections for profits in the fourth quarter of 2016 and is now expecting a decline in earnings compared with the same 2015 period, according to Chief Operating Officer Cindy Sanborn.
   Sanborn told investors and analysts at the Baird 2016 Industrial Conference in Chicago the company expects an $0.08 impact to fourth quarter earnings per share (EPS) due to costs related to a near-term debt refinancing.
   “While we now expect fourth-quarter earnings per share to be down, absent the eight-cent impact, the company’s earnings remain consistent with its prior guidance of flat to slightly down from the prior year,” she said.
   The Jacksonville, Fla.-based Class I railway noted in a statement it expects volumes to be relatively flat in the fourth quarter, but that strong cost performance should help offset those challenges to deliver solid financial performance throughout the year. Through a combination of ongoing network efficiency initiatives and volume-variable savings, CSX has delivered roughly $550 million in cost savings in the first nine months of 2016, according to the company.
   “These savings reflect aggressive actions related to three of the company’s major cost drivers – labor, fuel and assets – with gains in train length and crew savings, record fuel efficiency, and improved locomotive productivity and asset reliability,” CSX said.
   Third quarter 2016 profits at CSX fell 10 percent to $455 million ($0.48 per share) compared to the same period a year ago, according to the company’s most recent financial statements. Revenues for the quarter fell 8 percent year-over-year to $2.7 billion, consistent with an 8 percent decline in overall volumes, including a 21 percent drop in coal shipments.
   Railroad earnings have fallen across the board in North America amid a massive slump in shipments of energy-related commodities like coal and crude oil due to stricter Environmental Protection Agency standards and the emergence of cleaner low-cost alternatives like natural gas.
   In terms of its long-term strategy, CSX said it is aiming to drive earnings growth and margin expansion, and continues to target a mid-60s operating ratio.