OMAHA, Neb. (AP) — CSX says the railroad won't deliver the double-digit profit growth it promised this year because coal demand remains weak.
Executives remain optimistic about the railroad's prospects because service is improving, but they said Wednesday that mid-to-high single-digit profit growth is likely in 2015.
CSX said Tuesday that first-quarter profit grew 11 percent. While that exceeded Wall Street expectations, freight volume was lower than the company projected.
The strong dollar is hurting coal exports, metal and fertilizer shipments. And low natural gas prices have for years cut into demand for coal from utilities.
Domestic coal shipments will likely be down at least 5 percent. "We just haven't found the bottom yet," CEO Michael Ward said.
In the first quarter, CSX hauled 1 percent more carloads of freight overall. But the company predicts that 29 percent of the businesses it serves — domestic and export coal, forest products, metals and phosphates, and fertilizer — will ship less in 2015.
The railroad expects modest growth in shipments outside of the weak areas as the economy continues to expand at a slow, steady pace.
"The other businesses we're feeling pretty good about," Ward said.
But one big growth area for railroads in recent years, crude oil shipments, is expected to level off this year as a severe drop in energy prices slows drilling.
CSX Corp. reported $442 million in first-quarter net income, or 45 cents per share, on $3.03 billion revenue. The company operates more than 21,000 miles of track in 23 Eastern states and two Canadian provinces.
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