CSX’s Q3 2016 Earnings Review: Cost Reduction Partially Offsets Impact Of Lower Revenue

October 14th, 2016 by Trefis Team
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CSX reported an 8% year-over-year decline in its earnings per share in Q3, with top line headwinds negatively impacting the company’s profits. However, lower volume-related expenses and the impact of CSX’s cost reduction initiatives partially offset the impact of the decline in revenue on the company’s results, with the company’s operating ratio (operating expenses as a percent of revenue) deteriorating by only 70 basis points. Lower shipment volumes, primarily as a result of a decline in the demand for coal from utilities amid an environment of weak natural gas prices, translated into an 8% decline in CSX’s Q3 shipments. In addition, lower fuel prices negatively impacted the company’s fuel surcharge revenue. CSX’s operating expenses declined 7% year-over-year in Q3, with lower volume-related expenses (including fuel) and the company’s cost reduction initiatives together mitigating the negative impact of lower revenue on results, as illustrated below:

CSX Q3 Earnings 3

CSX Q3 Earnings 2

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Have more questions about CSX? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for CSX

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