Coal news and updates

CSX profit misses estimates on railroad coal shipments

CSX Corp, the biggest railroad in the eastern U.S., declined in late trading after reporting fourth-quarter profit that fell short of analysts’ estimates for the first time in two years amid dropping coal volume.

Net income slid 5.1 percent to $426 million, or 42 cents a share, Jacksonville, Florida-based CSX said today in a statement. That missed the 43-cent average of 25 analyst estimates compiled by Bloomberg.

CSX’s results led off earnings reports for the rest of the U.S. industry, with Union Pacific Corp., Norfolk Southern Corp. and Kansas City Southern coming next week. A shift to natural gas from coal at U.S. power plants hurt CSX, with a 5 percent drop in shipments of the fuel, the railroad’s biggest individual freight category.

“The thought of coal ever coming back to what it was or adding meaningfully to growth, that’s not going to happen,” Logan Purk, an analyst with Edward Jones & Co. who has a buy rating on CSX, said in a telephone interview. “Coal will just continue to be in a somewhat secular decline and that’s largely due to the abundance of natural gas in the U.S.”

Domestic coal volumes fell 9 percent in the quarter and 7 percent for all of 2013.

CSX fell 3.5 percent to $28.20 at 5:07 p.m. in trading after the market close in New York. The shares advanced 46 percent in 2013, compared with a 30 percent gain for the Standard & Poor’s 500 index.
Frigid Weather

The railroad’s operating ratio, an industry measure of efficiency comparing expenses to revenue, climbed to 73.2 percent, the highest since the first quarter of 2010, according to data compiled by Bloomberg.

Frigid temperatures that gripped the Eastern U.S. in December may have contributed to the increase, said Lee Klaskow, an analyst with Bloomberg Industries in Skillman, New Jersey.

“What we could glean from this is that maybe some of the service advisories had a negative impact on productivity and therefore negative impact on costs,” Klaskow said by telephone.

During the fourth quarter, CSX had several track outages and service disruptions due to inclement weather, including a half dozen events reported on its website.

CSX’s earnings last fell short of analysts’ estimates in the fourth quarter of 2011 as rising fuel costs sapped profit, according to data compiled by Bloomberg.

Sales climbed 4.7 percent to $3.03 billion, exceeding the $3.01 billion average estimate of analysts. Shipments of intermodal freight, which can be carried by rail, truck or ship, climbed 11 percent while chemical carloads, including crude oil, grew 18 percent, CSX said.

Source: Bloomberg