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Researched by Industrial Info Resources (Sugar Land, Texas)--Executives with CSX Corporation (NYSE:CSX) (Jacksonville, Florida) expect to see lower shipment volumes in fourth-quarter 2015 for the eastern U.S. freight railway, citing headwinds caused by lower coal and crude-oil shipments. Industrial Info is tracking 40 active CSX projects worth $2.63 billion. This includes 22 projects, worth $1.5 billion, which are in the construction phases; and 18 projects, worth $1.1 billion, which are in the planning phases, where plenty of factors could still alter their timing or outcomes.
The railway has an unfavorable fourth-quarter outlook for shipments of chemicals, metals, domestic and export coal, among others, with expectations that earnings per share for the fourth-quarter will be down slightly. Fourth-quarter coal volumes are expected to be down 20% from the same quarter last year, while crude-oil volumes will be down at least 25% on a sequential basis, Chief Financial Officer Frank Lonegro said during the company's earnings conference call.
CSX was still targeting its full-year earnings per share growth in the mid-to-single digits, despite expectations for annual coal revenue to decline about $450 million as a result of continued low natural gas prices and high coal inventories. The company said it now expects full-year 2015 domestic coal volumes to drop by more than 10%.
Railway executives said they expect to see a continued drop in domestic coal shipments in 2016. "We have about 3 million tons that we are moving this year that we will not see next year because of [coal-fired power] plant closures," said Chief Sales and Marketing Officer Fredrik Eliasson, who also cited continued high coal stockpiles.
The railway announced its earnings for third-quarter 2015 totaled $507 million, compared with $509 million in the same quarter of 2014. Price gains during the quarter were more than offset by lower fuel recovery surcharge revenue, a 3% decline in volume, and changes in CSX's business mix. Revenue for the third quarter stood at $2.94 billion, down 9% from $3.22 billion a year earlier.
Third-quarter agricultural product volumes were flat with those a year earlier, the railway reported, while phosphates and fertilizer volumes were down 13% as a result of weaker demand, which was caused by lower corn prices.
A slowdown in crude oil and frac-sand shipments continued to impact the railway, offsetting strong gains in liquid petroleum gas (LPG) shipments. Automotive volumes also were flat in the third quarter, while shipments of metals were down 15%, as domestic production continued to be hammered by steel imports, according to CSX.
The railway saw a 16% decline in domestic utility coal tonnage in the third quarter, as coal producers were beset by mild weather (leading to less demand by power utilities), high inventories and low natural gas prices, which favored natural gas-fired power generation. Domestic coke and coal for export also were down.
Third-quarter intermodal volume was up 6%, but intermodal revenue fell 1%.
All but one of the CSX projects being tracked by Industrial Info are statewide network upgrade/rehabilitation programs for 2015 and 2016. The exception is the Glassport (McKees Rocks) brownfield intermodal terminal, located in Ambridge, Pennsylvania. With a total investment value of $50 million, the project includes construction of a new 50,000-lift-per-year intermodal terminal on the 70-acre site of the former Pittsburgh and Lake Erie Railroad Yard. The terminal offers western Pennsylvania shippers direct intermodal access, helping to shift long-haul freight from highway to rail. Construction began in mid-2015, with completion expected in first-quarter 2017. A general contractor partnership between Trumbull Corporation (Pittsburgh, Pennsylvania) and Polivka International (Weddington, North Carolina) is performing the construction.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and ten international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
The railway has an unfavorable fourth-quarter outlook for shipments of chemicals, metals, domestic and export coal, among others, with expectations that earnings per share for the fourth-quarter will be down slightly. Fourth-quarter coal volumes are expected to be down 20% from the same quarter last year, while crude-oil volumes will be down at least 25% on a sequential basis, Chief Financial Officer Frank Lonegro said during the company's earnings conference call.
CSX was still targeting its full-year earnings per share growth in the mid-to-single digits, despite expectations for annual coal revenue to decline about $450 million as a result of continued low natural gas prices and high coal inventories. The company said it now expects full-year 2015 domestic coal volumes to drop by more than 10%.
Railway executives said they expect to see a continued drop in domestic coal shipments in 2016. "We have about 3 million tons that we are moving this year that we will not see next year because of [coal-fired power] plant closures," said Chief Sales and Marketing Officer Fredrik Eliasson, who also cited continued high coal stockpiles.
The railway announced its earnings for third-quarter 2015 totaled $507 million, compared with $509 million in the same quarter of 2014. Price gains during the quarter were more than offset by lower fuel recovery surcharge revenue, a 3% decline in volume, and changes in CSX's business mix. Revenue for the third quarter stood at $2.94 billion, down 9% from $3.22 billion a year earlier.
Third-quarter agricultural product volumes were flat with those a year earlier, the railway reported, while phosphates and fertilizer volumes were down 13% as a result of weaker demand, which was caused by lower corn prices.
A slowdown in crude oil and frac-sand shipments continued to impact the railway, offsetting strong gains in liquid petroleum gas (LPG) shipments. Automotive volumes also were flat in the third quarter, while shipments of metals were down 15%, as domestic production continued to be hammered by steel imports, according to CSX.
The railway saw a 16% decline in domestic utility coal tonnage in the third quarter, as coal producers were beset by mild weather (leading to less demand by power utilities), high inventories and low natural gas prices, which favored natural gas-fired power generation. Domestic coke and coal for export also were down.
Third-quarter intermodal volume was up 6%, but intermodal revenue fell 1%.
All but one of the CSX projects being tracked by Industrial Info are statewide network upgrade/rehabilitation programs for 2015 and 2016. The exception is the Glassport (McKees Rocks) brownfield intermodal terminal, located in Ambridge, Pennsylvania. With a total investment value of $50 million, the project includes construction of a new 50,000-lift-per-year intermodal terminal on the 70-acre site of the former Pittsburgh and Lake Erie Railroad Yard. The terminal offers western Pennsylvania shippers direct intermodal access, helping to shift long-haul freight from highway to rail. Construction began in mid-2015, with completion expected in first-quarter 2017. A general contractor partnership between Trumbull Corporation (Pittsburgh, Pennsylvania) and Polivka International (Weddington, North Carolina) is performing the construction.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and ten international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
