CSX’s Q4 Results: A Mixed Bag Amidst Challenging Conditions
The fourth quarter proved to be a tough one for CSX, as the railroad’s revenue and profits took a hit due to declining coal and fuel surcharge revenue. The impact of two hurricanes, which affected traffic in and out of Florida, further exacerbated the situation.
Weathering the Storm
Despite the challenges, CSX’s CEO Joe Hinrichs remained optimistic, stating, “We executed well through a difficult period. However, we are not satisfied with these results.” Hinrichs emphasized the company’s commitment to delivering on its vision for the benefit of customers, employees, and shareholders.
Financial Performance
The railroad’s operating income declined 16% in the fourth quarter, partly due to a $108 million goodwill impairment charge related to its Quality Carriers chemical trucking company. Excluding this charge, operating income was down 8%. Revenue declined 4% to $3.53 billion, while earnings per share fell 16% to 38 cents. The operating ratio, a key metric, increased 4.4 points to 68.7.
Looking Ahead
CSX is maintaining its three-year growth outlook, but executives warned of $350 million in headwinds this year due to lower export coal and fuel surcharge revenue. The company will also absorb $10 million in higher operating costs per month related to construction projects in Baltimore and the rebuilding of the Blue Ridge Subdivision.
Volume Trends
Overall volume was up 2% in the quarter, driven by a 4% increase in intermodal volume. Merchandise volume was flat, while coal traffic sank 7%. The outlook for this year includes overall volume growth of 3% to 6%, driven by intermodal and merchandise traffic.
Operational Challenges
The hurricanes took a toll on CSX’s operations, with intermodal trip plan compliance falling to 84.9% and carload trip plan performance dropping to 75.5%. However, the company achieved gains in fuel efficiency and locomotive productivity.
Safety Performance
Despite the challenges, CSX reported a 1% improvement in its train accident rate for the year. While the personal injury rate rose 27%, the railroad set an all-time record low number of employee days lost to injury as the severity of injuries declined.
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