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CSX Corp.'s first-quarter 2016 revenue fell 14 percent to $2.62 billion compared with Q1 2015 revenue as the Class I faced continuing volume declines, particularly in the coal market, executives announced yesterday.
Q1 earnings fell to $356 million, or 37 cents per share, compared with $442 million, or 45 cents per share in the same period a year ago, according to a CSX press release.
"As we managed through the impact of the continued coal decline and other market forces during the first quarter, CSX took aggressive actions to improve efficiency, reduce costs and streamline resources across the network to further reshape the company," said Michael Ward, chairman and chief executive officer.Total volumes declined 5 percent in the quarter compared with a year ago. Coal shipments were down 31 percent; agricultural products, down 9 percent; metals, down 18 percent; and forest products, down 7 percent. The 14 percent drop in revenue reflected the volume decline as well as lower fuel recovery and a $95 million year-over-year decline in other revenue related to payments received in 2015 that did not meet minimum volume commitments. Those trends more than offset pricing gains across nearly all markets from an improving service product and volume increases in automotive, intermodal, minerals and waste and equipment, CSX officials said.Intermodal volumes rose 4 percent; automotive, 12 percent; minerals, 3 percent; and waste and equipment, 6 percent.Expenses fell 12 percent during the quarter, as the company cut costs, including laying off employees. CSX's employee count at the end of the quarter stood at 27,911, down from 32,335 a year ago.The company reported $133 million in efficiency gains and lower volume-related costs of $64 million. In addition, lower fuel costs cut expenses by $78 million.Including the impact of lower expenses and revenue, operating income fell $139 million to $704 million during the quarter. CSX's operating ratio rose 90 basis points year over year to 73.1 percent."While CSX delivered strong efficiency gains in the first quarter, we continue to expect full-year earnings per share to decline in 2016 as a result of ongoing coal headwinds combined with other market fundamentals," said Ward. "At the same time, CSX remains focused on meeting and exceeding customer expectations while driving further efficiency savings to maximize shareholder value and achieve a mid-60s operating ratio longer term."CSX announced in February that it expected first-quarter 2016 earnings to drop "significantly" partly due to declining volumes, especially coal. Company officials said at the time they anticipate coal volume to drop more than 20 percent and most other markets to continue posting year-over-year declines this year.CSX was the first Class I to report quarterly earnings this year. Even though results were lower than a year ago, earnings were in line with Wall Street expectations, although the company fell short of revenue forecasts, according to The Wall Street Journal.
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