CSX’s revenues and profits declined in the fourth quarter because growth in cargo and intermodal traffic was not enough to offset sharp declines in coal and fuel revenues.
The impact of a pair of hurricanes—both of which affected interconnected traffic to and from Florida, a high for rail volume—also weighed on CSX’s (NYSE:CSX) operations, service metrics, and quarterly results.
Overall, we have executed well during a difficult period. “We are not satisfied with these results,” CEO Joe Heinrich told analysts and investors on the railroad’s earnings call Thursday. “We have a clear vision of what we want to achieve at CSX…and we are committed to delivering that vision for the benefit of our customers, employees and shareholders.”
Operating income in the fourth quarter decreased 16%, due in part to a $68 million goodwill impairment involving quality chemical carriers. Absent an impairment charge, operating income declined 8% for the quarter. Revenue fell 4%, to $3.53 billion. Earnings per share fell 16%, to 38 cents.
Operating ratio, or operating expenses as a percentage of revenue, was 68.7 for the quarter, up 4.4 points from a year ago.
CSX is maintaining the three-year growth forecast it made at its investor day in November.
This year CSX will also absorb $10 million per month in operating costs related to the construction of the Howard Street Tunnel Clearance Works in Baltimore, and the rebuilding of the Blue Ridge Subdivision.
CSX has begun diverting traffic on the Norfolk Southern ahead of the expected Feb. 1 start date for the Howard Street project, which will allow the railroad to run dual transatlantic intermodal trains for the first time. The long-awaited project should be completed by the end of the year.
The Blue Ridge Sub, which trails the rugged mountains of western North Carolina and eastern Tennessee, suffered $400 million in damage from Hurricane Helen. Traffic is rerouted, miles accumulate beyond disposal and additional crew costs, while the line is rebuilt.
For the quarter, total volume increased 2%, driven by a 4% increase in media equivalent volume. Cargo volume was flat, while coal traffic sank 7%.
The forecast for this year includes overall volume growth of 3% to 6%, driven by intermodal and cargo traffic.
Export mineral coal volumes, which accounted for more than half of railway coal volume for the first time in 2024, will be challenged this year due to mine production outages in the first half of the year. Meanwhile, domestic coal will take a hit from its planned power plant retirement this year.
Domestic intermediary is expected to grow this year, as CSX shifts its highway business to rail and develops a new Southeast and Mexico corridor with Canada’s Kansas City via its new interchange in Myrtlewood, Ala.
Meanwhile, freight volume will benefit from industrial development projects served by railways coming online.
CSX expects capital spending to be flat this year, excluding costs to repair the Blue Ridge subdivision.
For the quarter, operating and service metrics showed the impact of Hurricanes Helen and Milton. Intermodal flight plan compliance fell to 84.9% from 94.7% a year ago, while Carload flight plan performance was 75.5%, compared to 84.7% a year ago.
“As we worked hard in adverse conditions to maintain our network fluidity, we also drove strong efficiency improvements,” Chief Operating Officer Mike Currie said, noting gains in fuel efficiency and locomotive productivity.
Average train speed was flat during the fourth quarter, but Dwell rose 17% as the railroad carried traffic due to the hurricanes.
The train accident rate improved by 1% for the year, while the personal injury rate increased by 27%. Despite the increase, the railroad set an all-time record in the number of employee days lost to injury as the severity of injuries declined.
“We firmly believe that our work in the field on hazard identification and exposure controls, combined with our focus on newly hired and trained employees, will continue to reduce major injuries and incidents,” Currie said.
For the year, operating income decreased 5%, to $5.25 billion, as revenue decreased 1%, to $14.5 billion. The operating ratio for the full year was 63.9%, up 1.4 points compared to 2023.
Related coverage:
Union Pacific 7% profit in Q4, expects similar growth in 2025
Fuchs to drive the surface transfer plate
Union Pacific Shippers official tells of their online plans, security improvements
Post CSX Q4 earnings are swamped by lower coal and fuel revenues, and hurricane-related costs appeared first on Charging waves.