CSX Profit Tops Street Driven By Lower Costs

(RTTNews) - Railroad operator CSX Corp. (CSX), Wednesday reported a 20 percent drop in profit for the second quarter, hurt largely by double-digit revenue decline reflecting lower volumes. Nevertheless, earnings for the quarter trumped Wall Street estimates, helped by lower costs.

Jacksonville, Florida-based CSX's second-quarter profit dropped to $445 million or $0.47 per share from $553 million or $0.56 per share last year. On average, 25 analysts polled by Thomson Reuters estimated earnings of $0.44 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter dropped 12 percent to $2.70 billion from $3.06 billion last year. Analysts had a consensus revenue estimate of $2.69 billion for the quarter.

Total volumes dropped 9 percent to 1.60 million units, while revenue per unit dropped 3 percent to $1,695 from $1,742 last year.

"CSX continued to drive strong customer service and network efficiency in a challenging market, which is expected to persist throughout this year," said Michael Ward, chairman and chief executive officer.

Coal revenues plunged 34 percent to $416 million from $630 million a year ago, as volumes dropped 34 percent. Total merchandise revenues, which includes agricultural, industrial products and construction products, dropped 5 percent to $1.77 billion, while intermodal revenues slipped 7 percent to $419 million.

Total expenses declined 9 percent to $1.86 billion driven largely by efficiency gains, low fuel prices, lower volume-related costs.

Moving ahead, CSX continues to expect 2016 full-year earnings to decline, reflecting the ongoing transition in the energy markets, along with the impact of the strong U.S. dollar and low commodity price.

CSX is currently trading at $28.19, up $1.16 or 4.33% on the Nasdaq.