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Despite weak North American industrial production, Genesee & Wyoming Inc. (GWI) posted strong first-quarter financial results. Net income climbed to $13.9 million and earnings rose to 38 cents per diluted share compared with $10.4 million and 29 cents per diluted share, respectively, in first-quarter 2008.

Income from continuing operations increased from $11.2 million to $14 million and operating income rose 22.5 percent to $26.1 million.

However, revenue decreased slightly (by 1.6 percent) to $138.5 million as same-railroad revenue fell 16.6 percent — partially offset by revenue from acquisitions — because of depreciating Australian and Canadian dollars, and declining third-party fuel sales. Freight revenue dropped 1.6 percent to $89.2 million while same-railroad traffic decreased 8.3 percent and overall traffic increased 13.2 percent primarily because of acquisitions. North American pulp/paper traffic, metals and lumber/forest products traffic fell sharply in the quarter.

Excluding currency effects and changes in the cost of third-party fuel sales, GWI's same-railroad operating expenses declined 9 percent to $112 million compared with first-quarter 2008. The company’s operating ratio dropped 3.8 points to 81.1.

“The severe contraction of North American industrial production reduced our shipments of economically sensitive commodities such as steel, paper and lumber by 34 percent, 24 percent and 20 percent, respectively, on a same-railroad basis,” said GWI President and Chief Executive Officer John Hellmann in a prepared statement. “While these volume declines were significant, we have been able to offset a significant portion of the revenue losses with cost reductions. Several areas of GWI's business have been less affected by the recession, including our grain shipments in Australia, coal shipments in the United States and contract revenues, such as industrial switching.”

GWI owns and operates 63 regionals and short lines in the United States, Canada, Australia and the Netherlands, and owns a minority interest in a Bolivian railroad.