(The following appeared on the Louisville Courier-Journal website on January 30, 2010.)
LOUISVILLE, Ky. — CSX, the nation’s third-largest railroad, anticipates a slow economic recovery this year but warns that weak coal demand could undermine its earnings.
Chief Executive Michael Ward said this month that the railroad, through its “very muddy crystal ball,” predicts better results in all of its segments for 2010, except coal. That includes improvements in categories that were its weakest in 2009, such as autos and shipments of consumer goods.
The recession caused a domino effect that hurt railroads that haul coal. As industrial production slowed and jobs vanished, plants closed and consumers turned off the lights to save money. Because electricity demand waned, coal supplies at U.S. utilities began to build up. Mild winter weather also contributed to bigger stockpiles. And more utilities have switched to cheaper natural gas to run power plants.
Before the recession, coal — used to produce steel as well as electricity — was one of the railroad industry’s most lucrative segments.
CSX, based in Jacksonville, Fla., said its fourth-quarter net earnings rose 23 percent compared to a year ago — a period weighed down by a loss related to the company’s sale of the money-losing Greenbrier resort. Excluding that year-ago loss, earnings from continuing operations fell 16 percent.
Michael Ward, CEO. 2008 compensation: $12.4 million.
Employees: 34,000.
52-week stock price high/low: $52.83/$20.70
Revenue growth: 12.2 percent.
Net margin: 9.2 percent.
Return on equity: 16.3 percent.
Dividend growth rate: 42.6 percent.