CSX Corp.’s revenue fell in 2019 as economic growth cooled, and the Jacksonville-based railroad isn’t expecting a recovery early in 2020.
“We expect underlying economic demand to remain relatively consistent with current levels,” CEO Jim Foote said Jan. 16 in the company’s quarterly conference call with analysts.
“It took industrial activity a while to cool off and it will take a while to heat back up,” he said.
CSX reported fourth-quarter earnings of 99 cents a share, 2 cents lower than the fourth quarter of 2018.
Revenue dropped 8% to $2.885 billion. The company projected lower revenue, but the results still were below the $2.918 billion consensus forecast from analysts surveyed by Zacks Investment Research.
The company is projecting this year’s revenue will be flat to possibly 2% lower than 2019 revenue of $11.937 billion.
While revenue was below expectations, earnings were 2 cents higher than the consensus forecast, according to Zacks.
CSX was able to offset the decline in revenue with continued reductions in expenses.
“For the full year, EPS increased 9% to $4.17, and the operating ratio improved by 190 basis points to 58.4%,” Foote said.
“These are truly great results considering the industrial economy's second half performance,” he said.
The operating ratio – operating expenses divided by revenue – has been a key target metric for CSX since a management shakeup almost three years ago.
CSX’s efficiency initiatives have included job cuts, although the company last year targeted attrition instead of layoffs to reduce headcount.
Total employment dropped by 1,567 in 2019 to 20,908 in CSX's operations throughout the Eastern U.S.
Employment could drop further in 2020.
“Our focus is on growing the business and in that context, we are targeting cost efficiencies that will not inhibit service,” Foote said.
“There are additional cost levers out there for us to pull, but we must make sure we are well positioned to capture new business and respond to demand when industrial production moves up.”
Foote did not say if those levers would include more employment cuts, and while several analysts asked questions about headcounts, CSX officials did not give any numbers on jobs.
CSX two years ago said it was targeting employment of 21,000 by the end of 2020, which is close to the level at the end of 2019.