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Rail News: Financials

Florida East Coast Railway's revenue drops, operating ratio climbs in first quarter

Florida East Coast Railway (FECR) felt the pinch of weak residential housing construction and automotive markets during the first quarter. The 351-mile regional moved fewer aggregate carloads and vehicles, driving down total carloads 21.1 percent to 46,300 units compared with first-quarter 2006.

As a result, first-quarter revenue decreased 11 percent to $59.8 million, operating profit declined 23 percent to $14.4 million and total carload revenue fell 16.3 percent to $31 million. Aggregate revenue dropped 22.3 percent to $15.6 million while intermodal revenue decreased 1.2 percent to $27.8 million, reflecting a 1.8 percent volume decrease to 77,500 units compared with first-quarter 2006.

In addition, FECR’s first-quarter operating ratio worsened 4.1 points to 76 compared with first-quarter 2006’s ratio.

The lone bright spot: Quarterly operating expenses totaling $45.4 million dropped 6 percent compared with last year. FECR furloughed a small number of non-collective agreement workers, reduced train starts and instituted other cost-cutting measures during the quarter.

“We have responded to challenges at the railway by taking actions on the cost side of the business, which will benefit the railway’s financial results for the balance of the year,” said Adolfo Henriques, chairman, president and chief executive officer of FECR parent Florida East Coast Industries Inc., in a prepared statement.

Assuming the housing and automotive markets remain weak in the first half and begin to rebound in the second, FECR’s revenue will range between $265 million and $280 million (flat to a 6 percent increase), and operating profit will range between $72 million and $76 million (a 2 percent decrease to 4 percent increase) by year’s end, railroad officials project.

“In the long run, we expect Florida’s positive macroeconomic and demographic trends to continue to drive demand for goods, especially those that the railway transports,” said Henriques.

Contact Progressive Railroading editorial staff.

More News from 5/10/2007