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CSX Expects Coal Shipments to Fall at Least 5%

Railroad operator CSX Corp. estimated its domestic coal shipments will decline at least 5% this year, though it still expects to achieve its growth targets amid continued growth in its merchandise and intermodal markets.

Ahead of an industry conference Wednesday, Chief Financial Officer Fredrik Eliasson said in a news release that CSX still expects to record strong first-quarter earnings growth and double-digit earnings growth for 2015. However, he added that the expected decline in coal volume stands to make its growth targets more difficult to reach.

Overall, CSX estimated its freight volume will increase 3% for the quarter.

Coal shipments are a major part of CSX’s and other railroad operator’s businesses. In CSX’s case, coal represented roughly 18% of the company’s total freight volume and roughly 22% of its revenue for 2014.


The Jacksonville, Fla., company also expects more moderate growth in shipments of crude oil than anticipated previously, amid a slump in energy prices. Though crude shipments are a smaller portion of rail shipments, they have been one of the fastest-growing parts of the rail industry. In January CSX estimated crude-by-rail represents less than 2% of CSX’s total business.

In its presentation Wednesday, CSX estimated that a crude-oil train derailment in West Virginia last month will have a per-share impact of a penny to two cents on first-quarter earnings.

Mr. Eliasson also reiterated the company’s view that its merchandise and intermodal markets to continue to grow faster than the overall economy.

source: http://www.wsj.com