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Rail News: CSX Transportation

Lonegro: CSX expects full-year earnings decline


CSX Corp. Executive Vice President and Chief Financial Officer Frank Lonegro updated investors and analysts yesterday on the company's second-quarter and full year expectations, as well as plans to continue managing a transition in its business mix.

For the second quarter, CSX expects high-single digit volume declines, which will negatively affect earnings for the quarter. In addition, market forces are expected to offset gains in safety, service, pricing and efficiency, resulting in CSX's first full-year earnings decline since the recession, according to a CSX press release.

"We are seeing year-to-date volume declines across most of our markets, reflecting continued low global commodity prices, the strong U.S. dollar, and the transition in the energy markets," Lonegro told attendees of the Bank of America Merrill Lynch Transportation Conference in Boston.

However, the company's continued service improvements are supporting strong pricing through the business cycle. With the impact of service and efficiency improvements, CSX expects efficiency savings will be more than $250 million, approaching a company record.

Looking ahead, CSX's long-term strategies are designed to maximize its evolving business portfolio. Those strategies include matching resources with demand, using technology to improve service and efficiency, investing in intermodal service and focusing on providing "excellent service" to customers.

Those initiatives are expected to drive earnings growth and margin expansion, as CSX's business transitions to merchandise and intermodal markets, according to the press release. The company continues to target a mid-60s operating ratio longer term.

Contact Progressive Railroading editorial staff.

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