CSX Cuts Outlook, Warning of Revenue Decline
July 16 2019 - 8:19PM
Dow Jones News
By Paul Ziobro
CSX Corp. cut its outlook for the year, saying economic
uncertainty and the shutdown of a major oil refinery it served
would lead to lower revenue at the freight railroad.
The company expects revenue will fall as much as 2% this year,
compared with a previous forecast of an increase of 1% to 2%.
Shares dropped 6.4% in Tuesday's after-hours trading to
$74.48.
Like other freight railroads, CSX is contending with fallout
from trade tensions and weakening in parts of the industrial
economy.
Chief Executive Jim Foote said that shipping volumes for its
industrial customers remained weak and weren't showing signs of
improving soon.
That assessment stands in contrast to upbeat economic indicators
such as employment and consumer spending.
"Global and U.S. economic conditions have been unusual to say
the least, " Mr. Foote said on Tuesday's earnings call. "The
present economic backdrop is one of the most puzzling I've
experienced in my career."
On top of that, Philadelphia Energy Solutions is closing the
largest and oldest East Coast oil refinery after a fire tore
through the complex in late June.
CSX delivered crude-oil shipments to that facility, which
accounted for 1% of the railroad's overall annual shipping
volume.
CSX said the forecast reflects current economic conditions and
could improve if there is a pickup in the economy. "This is not
doom and gloom, this is not end-of-days kind of thing," Mr. Foote
said.
The muted forecast came as CSX reported a 1% revenue decline in
the second quarter to $3.06 billion.
Profit fell in the quarter to $870 million from $877 million a
year earlier. Earnings per share increased to $1.08 from $1.01.
Both earnings and revenue were below estimates of analysts polled
by FactSet.
The latest drop in revenue comes from weakness in CSX's
intermodal business, which ships consumer goods. CSX has been
deliberately closing intermodal lanes and shedding some of that
business.
CSX reported growth in its merchandise unit, where it offers
shipping of such products as food, chemicals, minerals and
metals.
The company continued to cut as part of a new operating plan,
with expenses down 3% compared with last year to $1.76 billion.
Write to Paul Ziobro at Paul.Ziobro@wsj.com
(END) Dow Jones Newswires
July 16, 2019 20:04 ET (00:04 GMT)
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