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CSX predicts flat 1Q volume
Wednesday - 1/23/2013, 12:11pm EST
By JOSH FUNK
AP Business Writer
OMAHA, Neb. (AP) - CSX Corp. expects 2013 to be another challenging year for the railroad, with continued weak coal demand but growth in other areas likely to offset lower coal volume.
Executives at the Jacksonville, Fla.-based railroad held a conference call with investors Wednesday _ a day after CSX reported a 3 percent decline in fourth-quarter profit.
CSX Chairman, CEO and President Michael Ward said some coal users will continue to shift to natural gas in 2013, and the weak global economy will undercut demand for industrial coal use.
"2013 will be another challenging year as the evolution of the energy market continues but stabilizes," Ward said.
CSX officials predict domestic coal shipments will decline by 5 to 10 percent in 2013 from last year's weak levels. And coal exports will likely drop to 40 million tons from last year's 48 million tons.
S&P Capital IQ analyst Kevin Kirkeby said in a research note that coal will remain a headwind for CSX longer than expected, but the railroad's other sectors should steadily improve throughout 2013.
In the first quarter of 2013, CSX officials expect shipping volumes to grow enough in intermodal, crude oil, fertilizer and building products to offset the decline in coal. So total volume in the quarter should be flat.
Ward said he expects the economy to continue growing slowly this year, but it would likely help if lawmakers in Washington could approve a long-term fiscal plan.
"Businesses are ready to move if they know a path forward," Ward said.
Ward said he believes CSX and the other freight railroads have a bright long-term future as more freight shifts from trucking companies to rails, but the immediate future will be challenging.
CSX officials plan to invest $2.3 billion in the railroad's network and equipment this year, similar to last year's $2.25 billion capital spending.
CSX said Tuesday that it generated $443 million in net income, or 43 cents per share, in the last three months of 2012. That's down from $457 million, or 43 cents per share, in the previous year's quarter.
Revenue fell 2 percent to $2.9 billion. CSX said declines in coal shipments more than offset gains in intermodal and merchandise shipments.
Sterne Agee analyst Jeff Kauffman said in a research note that CSX posted a decent fourth-quarter, but he's not sure if the railroad can improve profits in 2013 if coal demand remains weak, as predicted.
CSX operates over 21,000 miles of track in 23 eastern states and two Canadian provinces.
In afternoon trading CSX shares rose 88 cents, or 4.2 percent, to $21.69.
Follow Josh Funk online at www.twitter.co/funkwrite
CSX Corp.: www.csx.com
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