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Kansas City Southern
Rail News: Kansas City Southern
10/29/2009
Rail News: Kansas City Southern
Quarterly results show signs of a 'modest recovery,' KCS' Haverty says
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The last Class I to report third-quarter earnings posted similar results to the six other large roads — as in significantly less revenue and income, but drastically reduced expenses. Today, Kansas City Southern reported net income of $25.8 million, or 27 cents per diluted share, compared with $48.9 million, or 52 cents per diluted share, in third-quarter 2008.
Operating income declined 24 percent to $84.4 million and revenue tumbled 21 percent to $386.1 million. All commodity groups registered revenue declines on a year-over-year basis. But each group “recorded higher revenues on a sequential basis from the second quarter, reflecting a gradually improving business environment,” KCS officials said in a prepared statement. Third-quarter revenue rose 13 percent and carloads increased 12 percent vs. second-quarter figures.
Results show the railroad is “beginning to experience a gradually improving business environment” and “provide reasons to believe that at least we are seeing some signs of a modest recovery,” said KCS Chairman Mike Haverty.
Although the Class I’s operating ratio inched up 0.4 points to 78.1, the ratio bested the second-quarter mark of 87.3 by a wide margin.
Total operating costs fell 21 percent to $301.7 million compared with third-quarter 2008’s total as fuel costs plunged 45 percent to $49.7 million, compensation and benefit costs dropped 10 percent to $83.4 million, purchased service costs tumbled 29 percent to $36.4 million and equipment costs decreased 6 percent to $41.8 million.
“As encouraging as KCS’ third-quarter results are, management recognizes there is much work yet to be done to get the company’s revenues and earnings back to pre-recession levels,” said Haverty. “The company’s mix of new and expanded business opportunities, coupled with a continued commitment to efficient operations and cost controls, provides KCS with the resources to build upon the operational and financial leverage achieved in the third quarter.”
Operating income declined 24 percent to $84.4 million and revenue tumbled 21 percent to $386.1 million. All commodity groups registered revenue declines on a year-over-year basis. But each group “recorded higher revenues on a sequential basis from the second quarter, reflecting a gradually improving business environment,” KCS officials said in a prepared statement. Third-quarter revenue rose 13 percent and carloads increased 12 percent vs. second-quarter figures.
Results show the railroad is “beginning to experience a gradually improving business environment” and “provide reasons to believe that at least we are seeing some signs of a modest recovery,” said KCS Chairman Mike Haverty.
Although the Class I’s operating ratio inched up 0.4 points to 78.1, the ratio bested the second-quarter mark of 87.3 by a wide margin.
Total operating costs fell 21 percent to $301.7 million compared with third-quarter 2008’s total as fuel costs plunged 45 percent to $49.7 million, compensation and benefit costs dropped 10 percent to $83.4 million, purchased service costs tumbled 29 percent to $36.4 million and equipment costs decreased 6 percent to $41.8 million.
“As encouraging as KCS’ third-quarter results are, management recognizes there is much work yet to be done to get the company’s revenues and earnings back to pre-recession levels,” said Haverty. “The company’s mix of new and expanded business opportunities, coupled with a continued commitment to efficient operations and cost controls, provides KCS with the resources to build upon the operational and financial leverage achieved in the third quarter.”
