CSX Corporation (NYSE: CSX) reported a decline in both revenue and profits for the fourth quarter of 2024, primarily driven by significant drops in coal shipments and fuel surcharge revenues. Although growth in merchandise and intermodal traffic helped offset some losses, it wasn’t enough to counterbalance the downturn in other sectors. Additionally, the impact of hurricanes, which disrupted traffic to and from Florida—the railroad’s highest-volume state—further weighed on CSX’s performance.
Despite these challenges, CEO Joe Hinrichs remained optimistic during the earnings call, stating, “Overall, we executed well through a difficult period. However, we are not satisfied with these results. We have a clear vision of what we want to achieve at CSX and are committed to delivering on that vision for the benefit of our customers, employees, and shareholders.”
Financial Results: Declines and Setbacks
CSX’s fourth-quarter operating income fell by 16%, in part due to a $108 million goodwill impairment charge tied to its Quality Carriers chemical trucking division. Excluding the impairment charge, operating income decreased by 8%. Revenue for the quarter dropped 4%, totaling $3.53 billion, and earnings per share decreased 16%, falling to 38 cents. The operating ratio, which measures operating expenses as a percentage of revenue, rose to 68.7, up 4.4 points from the previous year.
Looking ahead, CSX maintained its three-year growth forecast outlined in November, though executives cautioned that the company will face $350 million in headwinds in 2025 due to reduced export coal volumes and lower fuel surcharge revenue, particularly in the first half of the year.
Major Investments and Infrastructure Challenges
CSX will also incur an additional $10 million in monthly operating costs related to two major infrastructure projects: the Howard Street Tunnel clearance work in Baltimore and the reconstruction of the Blue Ridge Subdivision. These projects, essential for the railroad’s long-term expansion, will allow for double-stack intermodal trains in the Mid-Atlantic and a critical rebuild of a key line damaged by Hurricane Helene.
The Howard Street Tunnel project, expected to be completed by the end of 2025, will enable CSX to run double-stack trains through the region, a significant milestone in the company’s intermodal network development. Meanwhile, the Blue Ridge Subdivision, which sustained $400 million in damage from Hurricane Helene, is undergoing repairs while traffic is being rerouted, causing additional operational costs due to out-of-route miles and extra crew requirements.
Performance Overview: Mixed Results in Volume
In terms of overall volume, CSX saw a modest 2% increase for the quarter. Intermodal volume grew by 4%, while merchandise volume remained flat. However, coal traffic experienced a 7% decline.
Looking to the year ahead, CSX forecasts volume growth of 3% to 6%, driven by intermodal and merchandise traffic. The railroad is also positioning itself for growth in domestic intermodal shipments, particularly through its new Southeast-Mexico corridor with Canadian Pacific Kansas City.
Export metallurgical coal volumes are expected to face challenges in 2025, as production disruptions and mine outages in the first half of the year are likely to impact coal shipments. Domestic coal volumes are also expected to decline due to planned power plant retirements.
Efficiency Gains Amid Disruptions
Despite the disruptions caused by the hurricanes, CSX has focused on maintaining operational efficiency. Chief Operating Officer Mike Cory highlighted improvements in fuel efficiency and locomotive productivity, even as intermodal and carload trip plan compliance took a hit, falling to 84.9% and 75.5%, respectively, compared to 94.7% and 84.7% in the previous year.
While average train speed held steady during the quarter, dwell time increased by 17%, reflecting the operational challenges brought on by the weather events.
Safety and Injury Rates
CSX also reported a 1% improvement in its train accident rate for the year, but noted a 27% increase in its personal injury rate. On a positive note, the railroad set an all-time low for employee days lost to injury, as the severity of injuries continued to decline.
“We believe our focus on hazard identification and exposure controls, along with efforts to train new employees, will continue to drive down injuries and accidents,” Cory emphasized.
Full-Year Results and 2025 Outlook
For the full year, CSX experienced a 5% decrease in operating income, which totaled $5.25 billion, and a 1% drop in revenue, which amounted to $14.5 billion. The full-year operating ratio was 63.9%, a 1.4-point increase compared to 2023. Looking ahead, CSX remains committed to its long-term growth strategy, though the company faces a complex year with several external and operational challenges.
As the railroad works to overcome these headwinds, it will continue focusing on efficiency improvements and infrastructure investments to position itself for future growth.
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