By Maria Armental
Freight rail operator CSX Corp. projects another challenging year in 2020, following a steeper-than-expected 3% revenue decline this year.
CSX, which operates one of the two major freight railroads east of the Mississippi River, has been overhauling operations through a series of cost cuts, modeled on the late railroad executive Hunter Harrison's "precision-scheduled railroading" principles, that have helped it sustain its financial performance even as shipment volumes and revenue have fallen.
Jacksonville, Fla.-based CSX on Thursday posted a record operating ratio of 58.4% for 2019, slightly better than analysts had projected.
It is an efficiency level record among the largest U.S. freights, CSX said, adding this year it expects it to come in at about 59%.
Operating ratio is a key metric for railroads that measures the proportion of operating revenue consumed by operating expenses.
"Our service is the best it has ever been and getting better," Chief Executive Jim Foote said in a conference call with analysts.
"The key here is reliability," Mr. Foote said, touching on one of the challenges for railroad companies: winning back customers.
"By operating a simpler, more efficient network," Mr. Foote said, "we are able to offer rail users a service that is trucklike in consistency, but with lower cost and more environmentally responsible."
Volume fell a steeper-than-expected 7% in the December quarter, including a double-digit decline in coal.
Company officials have noted that the business environment remains soft and warned that CSX would face difficult comparisons for the first half of the year.
"It took industrial activity a while to cool off, and it will take a while to heat back up," Mr. Foote said Thursday.
Overall, CSX reported a 9% profit decline and 8% revenue decline for the December quarter.
It ended the year with profit up 1% at $3.33 billion, or $4.17 a share, on $11.94 billion in revenue.
This year, it expects revenue to remain flat to down 2% and expects capital expenditures to remain at roughly $1.6 billion to $1.7 billion.
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(END) Dow Jones Newswires
January 16, 2020 17:36 ET (22:36 GMT)Copyright (c) 2020 Dow Jones & Company, Inc.