OMAHA, Neb. (AP) — Railroad operator CSX predicts its shipping volume will be relatively flat in the fourth quarter because demand for coal remains weak and the economy is growing slowly.
The company said that it expects coal demand from domestic utilities to remain weak into next year and export coal shipments will decline in the fourth quarter.
The decline in the coal shipments and weakness in agricultural and consumer product shipments will keep the railroad’s total volume from growing in the last three months of 2012.
Michael Ward, CSX Corp.’s chairman, president and CEO, said questions about the economy are also affecting the railroad’s results. He said the economic picture isn’t likely to become much clearer until Europe’s financial woes are addressed, the presidential election is complete and U.S. policymakers agree how to deal with the so-called fiscal cliff.
“Anybody’s best guess is not a good guess because of all the uncertainty,” Ward said.
CSX stock fell 41 cents, or 1.9 percent, to $21.22 in afternoon trading Wednesday. Its shares are down 10 percent from their 52-week high of $23.71 in mid-January. They traded as low as $19.87 in mid-December 2011.
The Jacksonville, Fla.-based company offered the outlook a day after reporting it earned $455 million, or 44 cents per share, in the third quarter. That’s down 2 percent from $464 million, or 43 cents per share in the same period a year ago.
The results topped the 43 cents per share that analysts surveyed by FactSet had expected, on average.
CSX said its revenue declined 2 percent to $2.89 billion as the mix of goods it carried changed. Total volume was down about 1 percent.
Deutsche Bank analyst Justin Yagerman said in a research note that CSX’s results were better than he expected, but unusual items that aren’t related to railroad operations played a key role.
Yagerman said CSX was helped by a lower-than-expected tax rate and penalty payments some utilities made because they didn’t ship the minimum amount of coal in their contracts.
S&P Capital IQ analyst Kevin Kirkeby said even with the railroad’s coal challenges, he considers CSX a good buy because it is selling at an attractive price, compared to its history.
Many investors watch freight railroads like CSX because the amount of goods they carry offers insight into the health of the economy. Another major railroad, Union Pacific Corp., plans to release its third-quarter results Thursday morning.
CSX operates over 21,000 miles of track in 23 eastern states and two Canadian provinces.
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Online:
CSX Corp.: www.csx.com
