CSX on July 13th announced second quarter 2016 net earnings of $445 million, or $0.47 per share, down from $553 million, or $0.56 per share, in the same period of last year.
“CSX continued to drive strong customer service and network efficiency in a challenging market, which is expected to persist throughout this year,” said Michael J. Ward, chairman and chief executive officer. “In this environment, the company continues to right-size resources while making strategic investments to transform the company and capitalize on market opportunities to drive long-term value creation.”
Revenue for the quarter declined 12%, driven primarily by an overall 9% volume decline that impacted nearly all markets, including coal declines of more than 30%, which more than offset pricing gains from an improving service product.
Expenses improved 9% in the quarter, driven by efficiency gains of $96 million, lower volume-related costs of $86 million as CSX further aligned its cost structure with current and future market dynamics, and $56 million from reduced fuel prices.
Despite the strong efficiency performance in the quarter, operating income decreased 17% to $840 million and the operating ratio increased 210 basis points year-over-year to 68.9%.
Looking forward, CSX continues to expect 2016 full-year earnings per share to decline, reflecting the ongoing transition in the energy markets, along with the impact of the strong U.S. dollar and low commodity prices. As the company positions itself to serve the markets of tomorrow, CSX remains focused on maximizing shareholder value and achieving a mid-60s operating ratio longer term.