Saturday, October 20, 2012

CSX Earnings

            CSX Corporation released earnings for Q3 2012 on October 16th. They reported a net income of $455 million vs $464 million in Q3 2011, showing a decline of 1.9% year-over-year. This breaks a four-quarter streak of profit increases. A mild winter caused coal demand to be suppressed; coal composes more than a fourth of the revenue for CSX. International volume of the company grew 10%, in part due to the success of the Maersk business. The reported EPS was $.44, beating consensus marginally, which was $.43, and outperforming Q3 2011 earnings of $.43. Reported revenues were $2.89 billion, missing expectations set at $2.93 billion. Shares of CSX were down 2.2% in the afternoon sharing at $21.15.

            Looking forward, the company sees itself as a neutral outlook for the fourth quarter. Estimated EPS for Q4 is $.47, and estimates are $1.85 for the fiscal year. Coal will continue to be challenged by low gas prices and high utility stockpiles, but the industrial, agricultural, construction, and domestic sectors all have favorable outlooks. There is uncertainty going forward with the company for Q4, as coal is becoming less demanded and CSX could be looking at moderate labor inflation. CSX sees itself with only moderate growth for the future.

- Peter Rodrigues, Industrial Junior Analyst

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