Kansas City Southern posts higher profit, flat carload volume in Q2

Kansas City Southern's second-quarter 2016 revenue declined 3 percent to $569 million, but operating income jumped 18 percent to $220 million compared with the same period a year ago, the Class I announced this morning.

Excluding the estimated impact of Mexican peso depreciation and lower U.S. fuel prices, KCS' revenue rose 2 percent compared with the previous year's quarter, company officials said in a press release.

Adjusted diluted earnings per share rose 18 percent to $1.22 for the quarter compared with a year ago, beating the Zacks Consensus estimate of $1.04.

Net income for the quarter came in at $120 million, or $1.11 per diluted share, compared with $112 million, or $1.01 per diluted share a year ago.

Carload volumes remained flat for the quarter compared with the year-ago period.

Operating expenses dropped 13 percent to $349 million; however, excluding the peso depreciation and U.S. fuel price impacts, operating expenses fell 7 percent.

KCS posted an operating ratio of 61.3 percent for the quarter, a 6.8-point improvement over second-quarter 2015's operating ratio.

"On balance, we were pleased with our second quarter 2016 results, particularly with the positive volume trend experienced during late May and the entire month of June," said KCS President and Chief Executive Patrick Ottensmeyer.

KCS' carload numbers increased 2 percent last month and ended unchanged with second-quarter 2015 largely due to "continued good performance" in chemicals, petroleum, agriculture and minerals business units, as well as a stronger automotive business late in the quarter, Ottensmeyer said.

Flooding in the Houston area affected customer service for the second consecutive quarter, he said.

"While bridge repairs were being made, KCS had to detour considerable traffic onto other carriers' routes," he said. "Again, we thank our railroad partners for their cooperation, as well as commend KCS transportation personnel for their efforts in keeping our service mostly fluid in the face of significant challenges."