CSX report: Revenue down, profits up, more layoffs coming

By Jane King, NASDAQ correspondent; Josh Funk, AP business writer
Associated Press

JACKSONVILLE, Fla. - A report CSX Corp. released Tuesday showed its fourth-quarter profits were up 25 percent despite lower revenue and lower volume, and management said it will benefit from the corporate tax cuts that take effect this year.

The Jacksonville, Florida-based railroad report released Tuesday said that if the tax cut benefit is included, the company posted a $4.14 billion profit, or $4.62 per share. That's up from $458 million, or 49 cents per share, a year ago.

Reading further, the report said that much of the growth in profit was due to a $1.7 billion cut to expenses, and there will be more reduction of expenses in 2018.

The railroad eliminated more than 4,000 jobs and idled hundreds of locomotives in 2017 and the report anticipates 2,000 more employees will be let go this year.

Tuesday's report was the first since Jim Foote was promoted to the CEO job following Hunter Harrison's death in December.  Foote reiterated his promise to continue the reforms that Harrison implemented last year in his nine months with CSX.

"I'm committed to seeing this through," Foote said about implementing and refining CSX's new operating model.

CSX operates more than 21,000 miles of track in 23 Eastern states and two Canadian provinces

Last year's changes led to severe service problems last summer, but performance has been improving since then and CSX is working to win customers back.

CSX plans to spend about $1.6 billion on capital investments this year, down from $2 billion last year and $2.7 billion in 2016. The lower spending is possible because CSX has stored so many locomotives and canceled any purchases of more while it works to make better use of its existing equipment and track.

Edward Jones analyst Dan Sherman said in a research note that he expects CSX to continue improving efficiency, so the stock is attractive at current prices.

CSX shares were down 63 cents, or about 1 percent, at $57.50 in extended trading following the release of the earnings report. They are up about 50 percent in the past 12 months.

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