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CSX expects shipment volume decline to halt in 1st quarter
CSX Corp, the No. 2 U.S. railroad, said a decline in shipment volumes could come to a halt in the first quarter of 2013 despite weak demand for coal.First-quarter volumes are likely to be flat year over year, the company said on a post-earnings conference call. Volumes fell 3 percent in the fourth quarter.
“We anticipate that in 2013 we will grow faster than the economy grows in the non-coal business,” Chief Executive Michael Ward told Reuters on Wednesday.
Automotive and chemical shipments will be strong in 2013, Ward said.
“If the economy is doing anything reasonable, it could probably more than overcome the shortfall in coal,” said Ward, adding that growth in 2013 revenue is dependent on the economy.
Low natural gas prices, high stockpile and weak global demand have put pressure on coal demand.
Jacksonville, Florida-based CSX relies on coal shipments for nearly a third of its revenue. Coal revenue fell 14 percent in 2012.
U.S. coal shipment will decline 5 percent to 10 percent for 2013, compared with a 29 percent decline in 2012, the company said on the call.
Coal export, however, is likely to fall about 16 percent to 40 million tons this year.
“Furthermore, we anticipate our rates to be pressured as we work with producers to keep U.S. coal competitive globally in an environment where underlying commodity prices for thermal and metallurgical coal are lower,” the CEO said.
Ward told Reuters that pricing has reached a low point and he does not see it going down further.
CSX could see volume growth from the second quarter if Washington agrees on a long-tem fiscal plan soon enough, he said.
“The uncertainty is affecting consumer and business confidence” (Reuters)
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