How Will CSX’s Profitability Grow In The Next Three Years?

by Trefis Team
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CSX Corporation
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CSX Corporation (NASDAQ:CSX), the Florida-based railroad company, has experienced a drop in its profitability over the last few years due to the declining shipments in the coal and commodities markets. However, the reversal of these trends in 2017 enabled the company’s earnings to rebound. This, coupled with the company’s efforts to bring down its operating expenses, enabled it to witness a surge in its profits. Below, we present the breakdown of CSX’s divisional EBITDA for 2017 and forecast for 2018 and beyond using our interactive platform.

CSX has been rationalizing its work force, improving fuel efficiency through longer train lengths, and reducing its support costs in order to bring down its operating ratio. A lower operating ratio (operating expenses as a percentage of total revenue) would result in higher operating profits for the company and its investors. Given the impressive results from its cost reduction initiatives, the company delivered productivity gains of $460 million in 2017, which reduced its operating ratio to 67.9%, 100 basis points lower than the prior year.

Going forward, CSX expects to further reduce its operating ratio to under 65% over the next few years. We anticipate that the company will be able to achieve its targeted operating ratio, which will boost its profitability in the near term.

Do not agree with our forecast? Create your own forecasts for CSX Corp. and its EBITDA using our interactive platform.

 

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