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Rail News: Kansas City Southern

KCS continues Class Is' streak of first-quarter revenues up, operating ratios down

Today, Kansas City Southern capped off the Class Is’ reports on first-quarter financial results as a worthy clean-up hitter. The large roads now are seven-for-seven in the revenue-up, operating ratio-down game. KCS’ first-quarter consolidated revenue of $388.4 million increased 5.5 percent and consolidated operating ratio of 84.2 improved 2 points compared with first-quarter 2005.

In addition, KCS reported quarterly operating income of $61.3 million, up 20.2 percent, and net income of $8 million, up 13 percent compared with the same 2005 period.

However, first-quarter operating expenses rose 3.1 percent to $327.1 million primarily because fuel costs increased 17.3 percent compared with first-quarter 2005.

“As part our ongoing integration of U.S. and Mexican shared services, our purchasing group has lowered the cost of purchased goods by terminating some unattractive arrangements and replacing them with market-competitive contracts,” said KCS Chairman, President and Chief Executive Officer Mike Haverty in a prepared statement. “We expect further benefits from this effort over the next year.”

KCS officials also expect operating costs to decrease by the fourth quarter after the railroad installs the Management Control System computer operating platform in Mexico later this year to schedule and track individual rail cars. In addition, officials anticipate the rest of 2006 will bring revenue growth from the start-up of intermodal service between the southeast U.S. and interior and Pacific Coast of Mexico, and a favorable pricing environment in both countries.

Contact Progressive Railroading editorial staff.

More News from 5/2/2006