CSX Railway Reports 5% Drop in Fourth-Quarter 2015 Earnings, Plans for $2.4 Billion Capex for 2016

Researched by Industrial Info Resources (Sugar Land, Texas)--Freight rail company CSX Corporation (NYSE:CSX) (Jacksonville, Florida), reported fourth-quarter 2015 earnings of $466 million, a 5% decline from the same period of 2014, amid falling coal volumes. Revenues for the quarter decreased 13% to $2.8 billion due to lower fuel surcharge revenues and volume declines. The firm is targeting $2.4 billion in capital expenditures (capex) for 2016, more than a $100 million decline from its 2015 target.

Industrial Info is tracking 20 active CSX projects worth $1.25 billion; 17 projects, worth $1.1 billion, are in the construction phase, and three projects, worth $128 million, are in the planning stage, where plenty of factors still could increase, decrease or totally eliminate the expected spending.

For the whole year of 2015, the company, which operates mainly in the eastern U.S., generated $11.8 billion in revenue, down 7% from 2014, and reported net earnings of nearly $2 billion, up 2%.

During the fourth quarter, revenue from the merchandise segment dropped 7% to $1.8 billion. Within this segment, agricultural products experienced a 9% decrease in revenue, the food and consumer division experienced a 6% drop, chemicals generated 9% less than last year, the automotive unit experienced a 1% drop, metals endured a 22% drop, minerals underwent a 1% drop, and forest products rose by 6%.

CSX reported that the revenue from its coal shipments segment in fourth-quarter 2015 decreased by 38% to $449 million. Domestic utility coal decreased in volume by 28% as a result of low natural gas prices, which favor natural gas power generation; mild weather and high stockpiles. Also, damage at several utility plants from flooding in South Carolina reduced volumes. Total export coal decreased in volume by 37%.

The company's intermodal traffic segment experienced a drop of 4% to $446 million.

"Looking forward, we expect volumes to decline in the first quarter," said Frank Lonegro, chief financial officer of CSX. "We expect the challenging freight environment to continue as the headwinds associated with coal, low commodity prices and a strong U.S. dollar more than offset the markets that will show growth." Most of the CSX projects being tracked by Industrial Info involve network upgrade/rehabilitation programs in the states where the railway operates. The company is working on a freight rail state-wide network upgrade/rehabilitation program for 2016, encompassing 2,600 miles in Georgia. The project has a total investment value of $92 million.

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