CSX Backs Guidance, but Sees Continued Energy Slump

By Anne Steele 

CSX Corp. on Tuesday reinforced its guidance for the year but warned energy market headwinds would damp the rail company's 2016 results.

The Jacksonville, Fla., company said growth in the coming year will be led by intermodal, or container transport, "as CSX continues to drive highway-to-rail conversions to capture a share of the estimated 9 million loads in the East that are well-positioned for intermodal service."

At the same time, the company said, service for automotive customers will lead industrial market growth as North American light vehicle production increases. Still, CSX has been hurt by declines in coal revenue of more than $1 billion over the past four years.

"While we expect the energy market headwinds to continue in 2016, we are focused on capturing opportunities in intermodal and industrial markets, " Chief Financial Officer Frank Lonegro said.

For the 2016 year, analysts expect revenue to grow 1% and earnings to grow 5% to $2.09.

CSX said it expects current-quarter earnings per share to decline slightly compared with the same period in 2014. Analysts are expecting a 3% decline to 48 cents a share.

The company continues to target mid-single-digit full-year earnings per share growth as intermodal growth and efficiency initiatives offset about $450 million in coal revenue declines. Analysts are looking for $2 a share in 2015.

CSX also said it continues to expect "meaningful margin expansion" in 2015 and a mid-60s operating ratio longer term.

In the last quarter, per-share earnings came in a penny higher than expected, though revenue fell 8.8% weighed down by lower fuel-surcharge revenue and volume declines. Coal volume slipped 18% in the quarter.

Write to Anne Steele at [e-mail]

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November 10, 2015 11:37 ET (16:37 GMT)

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