Railroad operator CSX Corp. (CSX) is due to announce its fourth quarter earnings after market close Tuesday, January 20, the historically monumental day when U.S. presidency changes hands. The conference call scheduled to start Wednesday, January 21, 2009, 8:30 am ET.
Slowing economy has hurt railroad demand significantly in the fourth quarter, pushing U.S. carloads down by 8.2% in 2008 to 3.89 million from last year. In December alone, U.S. rail carloads were down 14.2%.
John Gray, Senior Vice President of Association of American Railroads, said, "It's not surprising that U.S. rail traffic in December and the fourth quarter was down so much — we all know that the economy is in a world of hurt right now."
Combined North American rail volume for the first week of 2009 on 14 reporting U.S., Canadian and Mexican railroads totaled 336, 346 carloads, down 19.5% from last year, the Association of American Railroads reported.
Recently, the Jacksonville, Florida-based company said its fourth quarter earnings would be $0.63 per share, well below its year-ago results, hurt mainly by write-down of its investment in The Greenbrier resort.
The quarterly estimate includes non-cash impairment charge of about $0.27 per share related to the write-down of its investment in The Greenbrier resort in White Sulphur Springs, West Virginia.
Excluding the charge and insurance gains of $0.01 in the prior year quarter, comparable earnings would be about $0.90 per share, up 6% from a year-ago.
On average, 16 analysts polled by First Call/Thomson Financial expect the company to report earnings of $0.91 per share for the quarter. Analysts' estimate typically excludes one-time special items.
Fourth quarter revenues are projected to be about $2.7 billion, up 4% from the prior year quarter. Nine Wall Street analysts have a consensus revenue estimate of $2.71 billion.
Further, citing the current economic challenges, CSX stated that it is no longer affirming or providing long-term guidance.
On Jan. 13th, Barclays Capital lowered CSX 2008 earnings estimate to $3.52 from $3.67 per share, and 2009 estimate to $3.35 from $3.50 per share. Credit Suisse slashed 2009 earnings estimate to $3.50 from $3.60 per share.
For the third quarter of 2008, the company posted net income of $382 million or $0.94 per share, compared to $407 million or $0.91 per share in the third quarter of 2007. Quarterly revenue advanced 18% to $2.96 billion from $2.50 billion in the corresponding period of 2007.
During the third quarter, the company's revenue from Rail segment rose to $2.56 billion from $2.16 billion, and revenue from Intermodal segment increased to $399 million from $337 million in the year-ago period.
Earlier this month, CSX said that it is exploring all strategic options for The Greenbrier resort in White Sulphur Springs, West Virginia and that it has hired Goldman, Sachs & Co. as its financial advisor to help in the review.
Among CSX's peers in the industry, Burlington Northern Santa Fe Corp. (BNI) on October 31 announced that billionaire investor Warren Buffett's Berkshire Hathway Inc. (BRKA) on October 28 bought 825,000 shares of the Fort Worth, Texas-based company at a price of $79.65 per share. Berkshire now has 64.61 million shares in the nation's second-largest railroad.
On October 23, 2008, freight rail transportation company Burlington Northern Santa Fe Corp. reported third quarter net income of $695 million or $2.00 per share, up from $530 million or $1.48 per share in the same quarter of 2007. Total operating revenues for the quarter grew to $4.91 billion from $4.07 billion in the prior year quarter.
Burlington Northern Santa Fe is slated to announce its fourth quarter results after market close on Wednesday, January 21. Analysts expect the company to post earnings of $1.76 per share on revenues of $4.43 billion for the quarter.
Another rival, Union Pacific Corp. (UNP) is due to release its fourth quarter on Thursday, January 22. Wall Street analysts have a consensus earnings estimate of $1.24 per share, on revenues of $4.33 billion for the fourth quarter.
For the third quarter of 2008, Union Pacific posted net income of $703 million, higher than $532 million reported in 2007. On a per-share basis, earnings climbed 38% to $1.38 from $1.00 earned in the same quarter of 2007. Quarterly revenue rose 16% to $4.85 billion from $4.19 billion a year ago.
CSX Corp. closed Friday's trading at $29.83, down 35 cents or 1.16%. During the day, CSX shares touched a high of $31.18 and a low of $29.13. For the past 52-weeks, the stock has been trading between $28.27 and $70.70.
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