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Rail News: Kansas City Southern

KCS drops quarterly operating ratio more than nine points

Today, Kansas City Southern reported first-quarter operating income of $17.4 million, a 156 percent increase compared with $6.8 million in first-quarter 2003. The increase resulted from a $7.6 million increase (5.4 percent) in consolidated revenue and $3 million reduction (2.2 percent) in expenses because of lower casualty and insurance, depreciation and equipment costs.

Higher revenue, less expenses and improving service enabled KCS to lower it quarterly operating ratio 9.3 points to 84 compared with the same 2003 period.

"We are pleased that the positive revenue growth, the operating performance improvements and the stringent cost management experienced in the fourth quarter continued during the first quarter," said KCS Chairman, President and Chief Executive Officer Mike Haverty in a prepared statement. "Additionally, four of five commodity groups achieved growth, with the fifth, coal, affected by regularly scheduled maintenance outages at key utility plants served rather than changed market conditions."

However, quarterly operating profit was slightly dampened by a $5.6 million and $1 million drop in equity earnings and revenue, respectively, from TFM S.A. de C.V.

"Although disappointed in lower equity earnings from TFM, we fully recognize that the decrease in the contribution level to KCS is primarily the result of accounting for deferred taxes and the weakness of the Mexican peso versus the U.S. dollar rather than weakness in the TFM rail franchise," said Haverty. "The 19 percent increase in cross-border carloadings between KCS and TFM underlines our continued commitment to NAFTA-related traffic and the strength of the market."

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More News from 4/29/2004