Jan 13, 2016 2 min read

OMAHA, Neb. (AP) — CSX Corp. expects lower profits in 2016 as weak demand for coal and crude oil persists and the strong U.S. dollar continues to limit exports.

The railroad discussed its outlook for lower freight volume and a difficult year on Wednesday — one day after releasing its fourth-quarter results.

Chairman and CEO Michael Ward said the railroad will continue working to improve productivity and cut about $200 million in expenses in 2016, but it’s hard to predict what the industrial economy will do this year.

CSX also plans to reduce its capital spending this year by $100 million to $2.4 billion.

“2016 will be a more challenging year,” Ward said. “Volume in the first quarter and for the full year will decline as growth in some markets continues to be offset by the significant impact of continued coal declines, low commodity prices and a strong US dollar.”

The Jacksonville, Fla.-based railroad said Tuesday its fourth-quarter profit declined 5 percent to $466 million, or 48 cents per share, on $2.78 billion revenue.

The quarterly results were helped by a one-time property sale that added $80 million, or 5 cents per share, to CSX’s profit. Analysts surveyed by Zacks Investment Research expected adjusted earnings of 46 cents per share.

Citi analyst Christian Wetherbee said the railroad’s results were better than he expected thanks to tight cost controls.

Coal demand has fallen significantly over the past several years because of environmental concerns and because cheap natural gas prices prompted some utilities to switch fuels. Coal carloads fell 32 percent in the fourth quarter.

Intermodal shipments of containers that arrive in ports via ship grew 4 percent for one of the only major bright spots in CSX’s traffic report. Automotive shipments improved 5 percent in the quarter.

CSX operates more than 21,000 miles of track in 23 Eastern states and two Canadian provinces.