CSX Warns On Q3 Earnings, Lowers Full-year Outlook

(RTTNews) - Railroad operator CSX Corp (CSX) on Wednesday affirmed its outlook for flat earnings per share for the third quarter, but warned that achieving the estimate will be more challenging due to weaker than expected volumes.

At the Cowen and Company 8th Annual Global Transportation Conference in Boston, Massachusetts, CSX said it now expects fiscal 2015 earnings per share growth in the mid-single digits, citing the volume declines in the third quarter and ongoing challenges to coal that are expected to continue in the fourth quarter.

While reporting its financial results for the second quarter in July, CSX had forecast earnings per share growth for the full year in mid-to-high single digits, but noted at that time that achieving the upper end of that range would be more challenging given the current energy environment.

Jacksonville, Florida-based CSX noted that while it delivered strong financial, service and efficiency improvements in the first six months of 2015, it expects the second half of the year to be more challenging amid intensifying headwinds in its coal markets.

On average, analysts polled by Thomson Reuters expect the company to report third-quarter earnings of $0.51 per share, the same as in the year-ago period. For fiscal 2015, analysts expect the company to report earnings per share of $2.03, up 5.7 percent from the prior year.

CSX Chief Sales and Marketing Officer Fredrik Eliasson, formerly the company's Chief Financial Officer, said, "In the third quarter, we see strong pricing that reflects the value of our service, and we continue to drive greater asset utilization and reduce costs as we match our resources with demand while improving our service product."

"At the same time, overall volume to date is down about two percent, with both our domestic coal and merchandise markets tracking slightly below the company's original third quarter expectations," Eliasson added.

CSX said it will deliver the earnings growth for the full year despite domestic coal revenue declines that may exceed $400 million for the year. The company still expects to drive meaningful full-year margin expansion as it progresses towards its longer term goal of a mid-60s operating ratio.

CSX is trading at $28.16, down $0.16 or 0.57 percent on a volume of 3.14 million shares.