Net earnings jump 72 percent year-over-year; plan on track to reduce workforce by 2,000 in 2018.
CSX Corp., the first of seven Class I railways to report its second-quarter 2018 earnings, set the bar high, with net earnings for the quarter skyrocketing 72 percent year-over-year to $877 million.
Diluted earnings per share for the quarter stood at $1.01 per share, up from $0.55 per share for last year’s second quarter, according to the company’s latest financial statements.
Revenues for the quarter came in at $3.1 billion, up 5.8 percent year-over-year. Frank Lonegro, executive vice president and chief financial officer at CSX, said on the earnings call Tuesday the year-over-year revenues boost was driven by 2 percent more volume, higher fuel recoveries and solid core pricing gains across all major markets.
As CSX continues forward with its scheduled railroading model, the railway closed out the quarter with 23,810 employees, a 10.6 percent drop from 12 months prior.
“Consistent with our prior guidance, we remain on track to reduce our total workforce by 2,000 resources by the end of 2018,” Lonegro said during the earnings call.
“At its core, scheduled railroading is about relentlessly identifying and eliminating every unnecessary step, every unproductive asset, every extra mile and every extra car handling that does not contribute to the quality and consistency of our transportation product,” CSX President and CEO James Foote previously explained in the company’s 2017 annual report.
The scheduled railroading model was implemented at CSX in March 2017, when the company’s former president and CEO, E. Hunter Harrison, took over the railway. James Foote, who was named president and CEO of CSX in December after the death of Harrison, is an avid supporter of the operating model.
Meanwhile, CSX’s capital investments for the first six months of 2018 totaled $823 million, down 13.8 percent from the corresponding 2017 period.
In terms of specific impacts on CSX today from tariff activity, Foote said during the earnings call Tuesday, “From a steel standpoint, both finished steel out and ore business in, we have seen some positive as a result of the U.S. steel manufacturers kicking up production.
“The second area where there has been some real activities involves export soybeans. Out export grain business in total is around $30 million,” Foote added. “About a third of that is soybeans. And so, in the grand scheme of things, in terms of soybeans going to China, it’s really not a factor at all for us.
“The third area, which again has not had any real activity but again a lot of noise about it, is both NAFTA and Europe in terms of tariffs on imported autos,” he added. “We are not impacted in terms of imported autos from Mexico. We would clearly watch carefully if anything were to be put on imported vehicles from Canada, but nothing has happened there yet. And in terms of European imports coming in through the East Coast ports, normally they don’t touch rail anyway.”
Looking ahead, Foote said that CSX is raising its full-year revenues guidance from “up slightly” to up by mid-single digits compared to revenues of $11.4 billion for 2017, adding that the outlook is a reflection of various factors, including the railway’s belief that export coal strength will continue and higher fuel prices will remain amid a healthy economic backdrop.
So far tariffs not a factor for CSX
