LOS ANGELES (Reuters) - CSX Corp (CSX.O) on Wednesday reported quarterly profit that topped Wall Street’s expectations, but shares fell 2 percent after the No. 3 railroad operator forecast less robust revenue growth for 2019.
CSX forecast low single-digit revenue growth for 2019 on the heels of 7.4 percent growth last year.
Chief Executive James Foote told Reuters the outlook reflects factors including a planned reduction in its intermodal service while it implements improvements, not an expected deceleration in the U.S. economy.
His comments come as cooling economies in Asia and Europe roil global stock markets and fuel worries that the U.S. economy will stumble.
“While it’s hard to ignore the volatility in the equity markets, I cannot call out any trend in our business today that would point to a significant slowdown in our business,” Foote said on a conference call.
Edward Jones analyst Dan Sherman said of the CSX revenue forecast, “We are early in the year, and they are offering something they think is ‘meet-able’ under a variety of conditions.”
FedEx Corp (FDX.N) in December slashed its 2019 forecast after Europe’s economy weakened and the U.S. trade row exacerbated a cool-down in China. The company, which is seen as a business bellwether, said the U.S. economy remained “solid.” [L3N1YN51P]
CSX fourth-quarter net earnings fell to $843 million, or $1.01 per share, versus $4.14 billion, or $4.62 per share, last year when it booked a tax reform benefit resulting from the Tax Cuts and Jobs Act of 2017 and a restructuring charge.
Analysts, on average, had expected a profit of 99 cents per share for the latest quarter, according to Refinitiv IBES data.
Revenue increased 10 percent to $3.14 billion in the latest quarter, boosted by increased shipments and higher prices for transporting freight.
CSX’s operating ratio, a measure of operating expenses as a percentage of revenue and a closely watched gauge of railroad performance, was 60.3 percent versus 60.7 percent in the year-earlier quarter. Railroads boost profit by lowering their operating ratio.
CSX said it expects its 2019 operating ratio to beat its target of 60 percent and set a capital spending goal of $1.6 billion to $1.7 billion for this year.
Shares of CSX were down 2.1 percent to $64 in after-hours trading on Wednesday. Company directors on Tuesday authorized a new $5 billion share repurchase program.
Reporting by Lisa Baertlein in Los Angeles; Editing by Richard Chang, Matthew Lewis and Cynthia Osterman