Chief Financial Officer of the Jacksonville, Fla.-based railway Frank Lonegro told the Barclays Industrial Select Conference in Miami the company expects a further 20 percent decline in coal volumes in 2016.
CSX Corp. is projecting a significant decline in first quarter earnings as volumes are expected to continue to fall across several commodities groups.
The company said Wednesday “the intensifying coal headwinds and the impact of the strong U.S. dollar and low global commodity prices that impacted CSX in 2015 are expected to further challenge results in 2016.”
Frank Lonegro, chief financial officer of the Jacksonville, Fla.-based railway, told the Barclays Industrial Select Conference in Miami the company expects volumes to decline in the mid-high single digits for the quarter. CSX expects coal shipments to drop a further 20 percent and “most other markets” to continue posting year-over-year declines in 2016.
“We expect first quarter earnings to decline significantly, reflecting both this volume environment and the fact that we are cycling more than $100 million in unique items from the first quarter of 2015,” said Lonegro.
According to data from Thomson Reuters, analysts are forecasting consensus earnings of $0.37 per share for the quarter, an 18 percent decline from the first quarter of 2015.
The company reiterated its target of $200 million in productivity savings for the year and said it continues to work to further reduce structural resources and to match resources with volume declines near term.
“In this environment, we continue to focus on the things most in our control, including delivering safe, reliable service that increases operational efficiency and supports strong pricing for the value we provide to customers,” said Lonegro. “As we look toward a future with significantly less coal, our strategy includes rationalizing and realigning the network to match decreased demand in some markets and adjust to increases in others, investing in clearance and terminal projects to leverage intermodal growth, and optimizing technology to serve the CSX of tomorrow as we continue to target a mid-60s operating ratio longer term.”
CSX last week announced it would streamline operations at 16 lower volume mechanical facilities throughout its network as part of its cost cutting plan. Although the changes will eliminate 116 mechanical positions, the company said some employees will be given opportunities to fill positions in other higher-demand areas of CSX’s network.
CSX projects Q1 earnings to drop ‘significantly’
