CSX Corp expects the economy and rail shipments to rebound in 2021, particularly during the second half of the year, but remains unsure of just how much growth there will be.
On Thursday, the Jacksonville-based railroad reported net profit of $760 million, or $0.99 per share, for the fourth quarter of 2020, compared with $771 million, or $0.99 per share, a year earlier. Revenue declined 2% from the prior year to $2.83 billion.
This quarter’s results, the company noted, were impacted by a $48 million charge related to early debt retirement. Otherwise, CSX would have reported earnings per share of $1.04.
The railroad said it cut its quarterly expenses 7% to $1.61 billion as costs for labor and fuel both decreased. Operating income increased 5% for the quarter to $1.22 billion, compared to $1.15 billion in the same period in 2019.
Overall rail traffic in North America fell more than 7% in 2020, dragged lower by a 25% decline in coal shipments. As the economy recovers from the COVID-19 crisis, demand for rail transportation is expected to pick up.
CSX, the nation’s third largest railroad, reported volume increases in the fourth quarter for the first time since the pandemic began. Rail volume declined 20% during the second quarter, when many businesses were ordered closed as part of efforts to curb the spread of the virus.
The railroad expects its capital expenditures budget to be between $1.7 billion and $1.8 billion, which includes funding for core infrastructure investments, technology and marketing initiatives.
It also plans to increase hiring during the first- and second- quarters to have trained employees in place for the second half of 2021 and the anticipate increase in demand.
Preparations also include ensuring its workforce is healthy. As coronavirus cases spiked nationally after Thanksgiving, hundreds of CSX employees contracted the virus, FreightWaves reported.
As pockets of cases arise in its network, Foote said it can be difficult to make sure there is adequate staffing in areas where an outbreak has occurred. In some instances, a given location can see as much as a 40% reduction in staffing due to employees sick or quarantining.
Looking ahead, CSX plans to be ready to manage an anticipated rebound this year.
CSX chief executive officer and president James M. Foote told Fox Business, “It’s difficult to really draw a clear line of sight to the economy other than it seems to be continuing to improve. All of this I believe is related to getting the virus under control. We’re optimistic, but we really have to take it day by day.”
Source: Equities News