CSX Cuts Outlook, Warning of Revenue Decline

CSX Corp. (CSX) cut its outlook for the year, saying economic uncertainty and the shutdown of a major oil refinery it served would lead to lower revenue at the freight railroad.

The company expects revenue will fall as much as 2% this year, compared with a previous forecast of an increase of 1% to 2%.

Shares dropped 6.4% in Tuesday's after-hours trading to $74.48.

Like other freight railroads, CSX is contending with fallout from trade tensions and weakening in parts of the industrial economy.

Chief Executive Jim Foote said that shipping volumes for its industrial customers remained weak and weren't showing signs of improving soon.

That assessment stands in contrast to upbeat economic indicators such as employment and consumer spending.

"Global and U.S. economic conditions have been unusual to say the least, " Mr. Foote said on Tuesday's earnings call. "The present economic backdrop is one of the most puzzling I've experienced in my career."

On top of that, Philadelphia Energy Solutions is closing the largest and oldest East Coast oil refinery after a fire tore through the complex in late June.

CSX delivered crude-oil shipments to that facility, which accounted for 1% of the railroad's overall annual shipping volume.

CSX said the forecast reflects current economic conditions and could improve if there is a pickup in the economy. " This is not doom and gloom, this is not end-of-days kind of thing," Mr. Foote said.

The muted forecast came as CSX reported a 1% revenue decline in the second quarter to $3.06 billion.

Profit fell in the quarter to $870 million from $877 million a year earlier. Earnings per share increased to $1.08 from $1.01. Both earnings and revenue were below estimates of analysts polled by FactSet.

The latest drop in revenue comes from weakness in CSX's intermodal business, which ships consumer goods. CSX has been deliberately closing intermodal lanes and shedding some of that business.

CSX reported growth in its merchandise unit, where it offers shipping of such products as food, chemicals, minerals and metals.

The company continued to cut as part of a new operating plan, with expenses down 3% compared with last year to $ 1.76 billion.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

  (END) Dow Jones Newswires
  07-16-19 2004ET
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