CSX Corp. (NASDAQ:CSX)
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5 Years : From Oct 2012 to Oct 2017
TAKING THE PULSE: Railroad and trucking companies are expected to post improved results from a year earlier as mild winter weather boosted operating performance.
However, many railroads like CSX Corp. (CSX) and Norfolk Southern Corp. (NSC) continue to grapple witha slumping demand for coal, a result of falling prices for natural gas, high coal stockpiles and the unseasonably warm weather.
J.P. Morgan notes solid volume trends in industrial segments have helped offset the sharp weakness in coal volumes and Sterne Agee recently noted conservative planning by railroads and warmer weather have led to more efficient operations in the first quarter. Wolfe Trahan expects less-than-truckload companies to benefit the most from the mild weather and projects these companies' results to beat expectations given the additional tailwinds of better-than-typical seasonal volume, higher fuel prices and a favorable freight calendar.
Meanwhile, economic bellwethers United Parcel Service Inc. (UPS) and FedEx Corp. (FDX) are struggling with challenged airfreight markets abroad, though many analysts see slowly improving Asia air cargo trends. Barclays notes better airfreight demand and capacity constraint could drive earnings growth for both UPS and FedEx.
COMPANIES TO WATCH:
CSX Corp. (CSX) - reports April 17
Wall Street Expectations: Analysts polled by Thomson Reuters project CSX will report revenue of $2.93 billion. A year ago, the railroad posted a per-share profit of $1.06, on revenue of $2.81 billion. The company issued a three-for-one stock split in June.
Key Issues: Freight volume growth for the railroad has been anemic in recent months and results from CSX, a big mover of coal from mines to seaports, of late have been tempered by a soft demand for coal shipments. Earlier this year, CSX executives forecast continued strong U.S. coal exports in 2012 but said the company's coal shipments likely will be down "modestly" overall because of slack demand from domestic electric utilities. The company underwent an abrupt management change in January when it named new operating and financial chiefs. Chief Executive Michael Ward told Dow Jones Newswires in January that the change stemmed from the company's ongoing effort to boost customer service and increase the efficiency of its network.
Union Pacific Corp. (UNP) - reports April 19
Wall Street Expectations: Analysts expect the Union Pacific, the biggest public U.S. railroad by market capitalization, to post a per-share profit of $1.63 on revenue of $4.99 billion, up from a year-earlier profit of $1.29 a share on revenue of $4.49 billion.
Key Issues: Union Pacific's results have benefited from a booming business hauling materials to and from new shale-oil drilling sites. Shipments related to the shale oil sector accounted for up to half of the company's 3% overall volume increase in the fourth quarter and such shipments, which doubled in 2011, could again double this year. The company's better-than-expected fourth-quarter results were also helped by core price increases. In March, Chief Executive James R. Young said he is taking a medical leave of absence during treatment for pancreatic cancer. Earlier this year, Young said Union Pacific's positive trends from 2011 will continue in 2012 and forecasted "steady, slow" volume growth.
Norfolk Southern Corp. (NSC) - reports April 24
Wall Street Expectations: Wall Street expects Norfolk Southern to report earnings of $1.12 a share on revenue of $2.75 billion. Last year, the company posted a profit of 90 cents a share, which included a 10-cent charge related to an unfavorable insurance arbitration ruling, and revenue of $2.62 billion.
Key Issues: Norfolk Southern, which derives about 30% of its revenue from coal transport accounts, faces similar headwinds as CSX. However, the railroad's coal volume rose 3% in the fourth quarter on strong export volume, which is expected to remain solid, while coal demand from domestic utilities fell amid mild temperatures. The company's profit also improved in the fourth quarter as it was able to move freight at higher prices than a year earlier.
United Parcel Service Inc. (UPS) - reports April 26
Wall Street Expectations: Analysts project the package delivery company to report a profit of $1.01 a share and revenue of $13.27 billion. A year earlier, UPS posted earnings of 88 cents a share and revenue of $12.58 billion.
Key Issues: UPS continues to face a weak global airfreight market, which has suffered from slumping volume in Asia and a drop in exports to the U.S., though the shipping giant said earlier this year its domestic package shipments are rising at a brisk pace. In January, the company reported a 29% decline in fourth-quarter earnings weighed down by a hefty pension charge. Chief Financial Officer Kurt Kuehn then noted European markets would continue to slow and said there had been no pick up in the Asia-to-U.S. business. However, the company has said U.S. package volume should rise 2% to 3% this year, outpacing the 0.9% growth in 2011. Dutch package company TNT Express NV (TNTE.AE) last month agreed to be acquired by UPS in a $6.8 billion deal that will cement UPS' position as a leading package-shipping company in Europe.
YRC Worldwide Inc. (YRCW) - reporting date to be announced
Wall Street Expectations: YRC is expected to post a loss of $10.61 a share and revenue of $1.19 billion. Last year, the company saw a loss of $2.14 a share and revenue of $1.12 billion.
Key Issues: The struggling trucking company has posted results in the red nearly every quarter since 2008 as expenses have continuously outpaced revenue growth. YRC, saddled with debt, has been fending off a bankruptcy protection filing since late 2009. Much of the company's increased costs are due to its restructuring, streamlining and other efforts to get back on track. Last month, YRC agreed to sell its interest in Shanghai Jiayu Logistics Co. to its joint venture partner in order to sharpen its focus on the North American less-than-truckload business. While the company reported disappointing fourth-quarter results in February, its freight division's tonnage per day and revenue per hundredweight, a broad pricing measure, both improved.
(The Thomson Reuters financial estimates and year-earlier figures may not be comparable due to one-time items and other adjustments.)
-By Nathalie Tadena, Dow Jones Newswires; 212-416-3287; email@example.com