CSX earnings down 2 percent, revenue up 9 percent in Q4

CSX Corp. reported fourth-quarter 2016 net earnings fell 2 percent to $458 million, or 49 cents per share, from $466 million, or 48 cents per share, in fourth-quarter 2015.

Revenue for the quarter rose 9 percent to $3 billion compared with $2.78 billion a year ago.

The fourth quarter of 2016 included an operating property sale and a debt refinancing charge, both of which were 8 cents per share and offset each other in the quarter. In addition, the quarter included an extra accounting week resulting from the company's 52/53 week fiscal reporting calendar, which benefited earnings by 3 cents per share, according to a CSX press release.

CSX posted $1 billion in operating income for the quarter, which included a $115 million from the property sale and a $62 million benefit from the extra week.

CSX's Q4 2016 earnings roughly met consensus expectations — about 50 cents per share — but were below broader investor expectations, Robert W. Baird & Co. Inc. analyst Benjamin Hartford said yesterday in a Baird Flash Report.

Hartford noted that the Q4 2016 earnings per share grew for the first time since Q3 2015, helped by the extra operating week in 2016 as well as strong export coal volumes during Q4.

For the full year, CSX reported 2016 revenue of $11.1 billion, down 6 percent from 2015. Net earnings for the year dropped 13 percent to $1.7 billion from $1.968 billion in 2015.

CSX officials cited "headwinds" from global commodities prices, strength of the U.S. dollar and a 5 percent decrease in traffic volumes for the decline in revenue and net income in 2016. The Class I's coal business plummeted 21 percent during the year. Still, the company posted earnings per share of $1.81, an operating income of $3.4 billion and an operating ratio of 69.4 percent for the year, CSX officials said.

"In an environment where the company lost almost $470 million of coal revenue and experienced weakness across most of its markets, CSX delivered nearly $430 million of productivity savings in 2016, while improving customer service,” said Chairman and Chief Executive Officer Michael Ward. "With business conditions gradually improving and the ongoing transformation into the CSX of Tomorrow, we will continue to deliver sustainable shareholder value."

The "CSX of Tomorrow" strategy is designed to drive profitable growth in the merchandise and intermodal markets, and a operating ratio in the mid-60s over the long term. To learn more, read this article that appeared in the November 2016 issue of Progressive Railroading.