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Rail News Home Kansas City Southern

4/24/2008



Rail News: Kansas City Southern

KCS drives up revenue and income, drives down operating ratio


Like the other Class Is, Kansas City Southern faced two stiff headwinds in the first quarter: high fuel costs and severe winter weather. Unlike some of its counterparts, KCS sailed through the challenges.

Owner of The Kansas City Southern Railway Co. and Kansas City Southern de México S.A. de C.V., KCS generated revenue of $450.6 million, up 9.6 percent compared with fist-quarter 2007's total. All commodity groups registered gains, with automotive up 19.4 percent, agriculture and minerals up 16 percent, chemical and petroleum products up 14.7 percent, intermodal up 9.1 percent, coal up 4.2 percent, and forest products and metals up 1.4 percent.

In addition, KCS' operating income increased 15 percent year over year to $83.4 million, diluted earnings per share jumped 86 percent to 39 cents and operating ratio dropped 0.9 points to 81.5.

"Tighter operating discipline contributed to our stronger operating performance, which was evidenced by improved trends in train velocity and terminal dwell time in the first quarter,” said KCS Chairman and Chief Executive Officer Mike Haverty in a prepared statement. "In addition, the integration of approximately 180 new locomotives into our network fleet has resulted in significant improvement in locomotive availability over the past few months."

The lone dark cloud in the quarter: operating expenses, which rose 8.4 percent to $367.2 million compared with first-quarter 2007's total. Fuel expenses, which jumped 24.6 percent year over year to $77.9 million, were the main culprit. However, KCS partially offset the increase through fuel surcharge revenue.

"The combination of new business opportunities, strong pricing environment and continuous operating improvements positions us well for the remainder of the year," said Haverty.


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