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What Happened to CSX’s Coal Revenues in the Third Quarter?

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CSX’s third-quarter coal revenues

In this part, we’ll turn to CSX’s (CSX) revenues by segment, starting with coal. Coal remains an important commodity for the US railroads, accounting for more than a third of their total originated tonnage in 2017. In the third quarter, CSX’s coal revenues jumped 14.0% YoY (year-over-year) to $588.0 million from $514.0 million in the third quarter of 2017.

Coal’s share in CSX’s total revenues totaled 18.8% in the quarter, up 0.10% from its share of 18.7% in the third quarter of 2017.

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Third-quarter coal volumes

In the third quarter, CSX reported total coal volume of 234,000 units, up 7.0% YoY from 218,000 units in the third quarter of 2017. The railroad’s coal revenue per unit grew 7.0% to $2,513 from $2,358. Revenue per unit growth reflects a strong volume and pricing environment for the company’s coal business.

Domestic coal revenues slumped 0.9% YoY to $347.0 million in the third quarter from $350.0 million in the third quarter of 2017. Utility coal shipments contracted due to solid competition from natural gas. Coke, iron ore, and other volumes grew YoY mainly due to solid domestic steel production.

Export coal revenues jumped 47.0% to $241.0 million from $164.0 million in the third quarter of 2017. Export coal shipments grew due to higher demand for US coal, which resulted from higher global benchmark prices and global supply levels.

CSX’s coal outlook

CSX expects strong demand for export coal in the fourth quarter. During the company’s third-quarter earnings call, CSX’s CEO James Foote said, “We were expecting revenue growth for this year to be in the mid-single digit range. We are now looking for full-year growth to be 6% to 8%. Clearly, we are doing better than we expected coming into the year. A lot of this is due to the continued strength of export coal, but all of our business groups are doing well.”

We’ll get more color on the railroads’ (IYT) coal business in the next few days. Canadian Pacific Railway (CP) plans to announce its third-quarter earnings on October 18 after market hours. 

Kansas City Southern (KSU) expected to release its third-quarter earnings on October 19. Canadian National Railway (CNI) and CSX’s rival Norfolk Southern (NSC) plan to announce their third-quarter earnings on October 23 and October 24, respectively.

In the next section, we’ll discuss CSX’s intermodal performance.

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