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Rail News: Kansas City Southern

KCS reduces full-year 2015 guidance

Kansas City Southern today announced it is reducing its full-year revenue outlook to reflect slower year-to-date carload growth primarily in the energy sector, continued deterioration of the value of the Mexican peso and lower fuel surcharge revenue.

The company said it now expects single-digit revenue growth, reduced form the mid single-digit revenue growth provided in its previous full-year 2015 guidance issued in January.

"Lower crude oil and natural gas prices are contributing to an expected approximate 10 percent decline in first quarter 2015 energy revenues," according to a KCS press release. "Due to the continued uncertainty in the energy markets with the recent decline in crude prices to six-year lows, the company believes crude oil growth for 2015 will be lower than expected."

Lower gas process will continue to have a negative impact on KCS' coal business, which would result in a 20 percent decline in coal revenue during the first quarter. Additionally, KCS is experiencing lower than expected revenue in frac sand and metal carloads related to a "significant decline" in energy drilling in the United States.

As a result of slower than expected carload growth, first-quarter 2015 revenue will be flat compared with first-quarter 2014. Foreign exchange and rule surcharge revenue is expected to negatively impact the quarter's revenue by about 4 percent compared with the year-ago period.

Contact Progressive Railroading editorial staff.

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