CSX Corp. executives touted export coal demand and pricing as key drivers for the company's coal revenue through 2018.
The railroad benefited from a strong overall pricing environment during the fourth quarter of 2018, along with healthy freight demand levels and "supportive export coal benchmarks," said Frank Lonegro, executive vice president and CFO, on a Jan. 16 earnings call.
President and CEO James Foote said on the call that fourth-quarter coal revenues were up 8% to $586 million, "with strength in our export met business offsetting domestic utility weakness." Domestic steel and industrial customers also "saw good growth," he said. The company was expecting the high export steam and coking coal benchmarks to drop off at some point in 2018, Foote said, but they remained high for most of the year.
Foote said the company has also improved its efficiency to deliver better service using fewer assets.
CSX saw a 7% uptick in overall 2018 coal revenue to $2.25 billion compared with 2017, according to its Form 8-K.
"Similar to our view coming into 2018, we expect some moderation of export coal benchmark prices in the back half of the year but remaining at very healthy levels," Foote said.
Mark Wallace, executive vice president of sales and marketing, said, to his knowledge, 2018 marked the company's second-highest export coal year with 43 million tons. CSX expects similar results in 2019, and has about 65% of this year's contracts locked up.
"So we see a very good demand environment ... as long as we can get the coal out of the ground and get it to the port, I think we'll have a very good export coal year," Wallace said.
The railroad's fourth-quarter 2018 coal volumes were up 3% year over year while its net earnings dropped to $843 million, or $1.01 per share, from $4.14 billion, or $4.62 per share, a year ago.