CSX Q4 Profits Sink Amidst Coal Revenue Decline and Hurricane Costs
Saturday, Jan 25, 2025 5:10 pm ET
3min read CSX Corporation (NYSE: CSX) reported a decline in fourth-quarter profits, primarily due to lower coal and fuel surcharge revenue, as well as hurricane-related costs. The railroad giant's earnings per share (EPS) fell 16% to 38 cents, while revenue decreased 4% to $3.53 billion. The operating ratio, a key performance metric, increased to 68.7, up 4.4 points from the previous year.
CSX's coal revenue took a significant hit, with export metallurgical coal volumes challenged by mine production outages in the first half of the year. Additionally, domestic coal volumes are expected to decrease due to planned power plant retirements. The company also faced headwinds from lower export coal and fuel surcharge revenue, primarily in the first half of 2025.
CSX's overall volume grew 2% in the quarter, driven by a 4% increase in intermodal volume. However, coal traffic sank 7%, and merchandise volume remained flat. The company expects overall volume growth of 3% to 6% in 2025, driven by intermodal and merchandise traffic.
CSX is maintaining its three-year growth outlook, despite facing $350 million worth of headwinds this year from lower export coal and fuel surcharge revenue, primarily in the first half of the year. The company is also absorbing $10 million worth of higher operating costs per month related to construction projects such as the Howard Street Tunnel clearance work in Baltimore and the rebuilding of the Blue Ridge Subdivision.
CSX's operating and service metrics showed the impact of Hurricanes Helene and Milton. Intermodal trip plan compliance fell to 84.9% from 94.7% a year ago, while carload trip plan performance was 75.5%, compared to 84.7% a year ago. Average train speed held steady, but dwell was up 17% as the railroad held traffic due to the hurricanes.
CSX's train accident rate improved 1% for the year, while the personal injury rate rose 27%. Despite the increase, the railroad set an all-time record low number of employee days lost to injury as the severity of injuries declined.
CSX's outlook for 2025 includes overall volume growth of 3% to 6%, driven by intermodal and merchandise traffic. The company expects capital spending to hold steady this year, excluding costs to repair the Blue Ridge Subdivision.
In conclusion, CSX's Q4 profits sank due to lower coal and fuel revenue, as well as hurricane-related costs. Despite these challenges, the company is maintaining its three-year growth outlook and is taking steps to mitigate the impact of hurricanes and improve its financial performance. Investors should closely monitor CSX's progress as it navigates the headwinds and works to maintain its competitive edge in the railroad industry.
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