KCS' earnings fall in Q4, EPS beats estimates

A decrease in traffic volume, a hurricane in Mexico and flooding in the United States resulted in Kansas City Southern posting lower revenue, profit and earnings for the fourth-quarter and full year in 2015, the company announced this morning.

KCS posted fourth-quarter 2015 net income of $140 million on revenue of $598 million, compared with net income of $142 million on revenue of $642.5 million for the same period in 2014, according to a KCS press release.

Adjusted diluted earnings per share were $1.23, a 3 percent decrease compared with Q4 in 2014, but above the analyst estimate of $1.10.

Operating income for Q4 2015 was $219 million, up 2 percent compared with the previous year's quarter. The Class I's operating ratio came in at 63.4 percent, a 3.3 point improvement from Q4 2014.

For the full year 2015, KCS posted net income of $485 million on revenue of $2.4 billion, compared with net income of $504 million on revenue of $2.57 billion for the full year in 2014. Adjusted diluted earnings per share for 2015 were $4.49 compared to $4.82 in 2014. Year over year, carloads declined 3 percent.

The company's adjusted operating ratio was 66.4 percent in 2015, a 0.7 point improvement compared with 2014's operating ratio.

"KCS' ability to react to a rapidly changing market and operational conditions was clearly evidenced during the fourth quarter in which not only did the company have to contend with an unsettled economy but also with a hurricane in Mexico and floods in a key section of its U.S. rail network," said KCS Chief Executive Officer David Starling. "Despite these challenges, KCS attained a fourth quarter 2015 operating ratio of 63.4 percent, a 3.3 point improvement from the prior year. System velocity and system dwell metrics also improved, returning KCS to the top tier of Class I railroads in these categories."

Although the company faces an uncertain economy in 2016, "the progress we have made during 2015 gives us confidence that KCS is positioned to maximize its near-term and longer-term business opportunities," Starling added.