CSX Allays Lower Coal Shipments With Cost Cutting

By Ezequiel Minaya 

CSX Corp. said Wednesday that revenue for its third quarter fell 8%, as plunging coal shipments -- a key business for freight lines -- kept pressure on the railroad operator.

The company's belt tightening, however, once again helped it top Wall Street expectations.

The freight line has previously said it expects coal volumes to fall 25% this year. The railway sector has been battered by plunging fuel prices that have made natural gas a cheap alternative to coal. Fuel-surcharge revenues have also dropped.

For the latest quarter, coal shipments slipped 21%. CSX's metals and equipment business was also a leading decliner, falling 13%.

CSX said export coal declined due to oversupply in the world market and a strong U.S. dollar that generally makes U.S. exports more expenses overseas. Domestic coal, CSX added, while still sliding has offered a relative bright spot. The railroad said declines appeared to ease because hot summer weather stoked demand.

Intermodal traffic -- the moving of shipping containers -- declined 7%.

CSX, however, has met what it has deemed "recession-like" pressures by furloughing workers and mothballing railcars as productivity measures have helped the company meet or defy Wall Street expectations.

For the latest quarter, the company cut total expenses 6.8% to $1.87 billion.

For the quarter ended Sept 23, CSX reported a profit of $455 million, or 48 cents a share, down from a year-ago profit of $507 million, or 52 cents a share.

Revenue fell to $2.71 billion from $2.94 billion a year ago.

Analysts surveyed by Thomson Reuters expected earnings to decline to 45 cents a share on revenue of $2.69 billion.

Shares of the company, up 6.3% over the past year, climbed 2.4% after hours to $30.98

According to the Association of American Railroads, carloads in September were down 5.4% from the same month last year. Coal shipments were down 13.1% while petroleum products declined 21.6%.

Write to Ezequiel Minaya at [e-mail]

(END) Dow Jones Newswires

October 12, 2016 17:20 ET (21:20 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.