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RAIL EMPLOYMENT & NOTICES



Rail News Home Financials

11/1/2006



Rail News: Financials

Mexican line reconstruction delays, after-tax charges lead to third-quarter loss for Genesee & Wyoming


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A delay in rebuilding a hurricane-damaged line in Mexico, and charges and adjustments associated the Australian Railroad Group (ARG) sale and Galveston, Texas, litigation colored Genesee & Wyoming Inc.’s (GWI) third quarter red. Today, the short-line holding company reported a quarterly net loss of $12.1 million compared with net income of $17 million in third-quarter 2005.

In addition, GWI posted an operating loss of 13 million compared with third-quarter 2005’s operating income of $24.1 million.

The company recorded a non-cash, after-tax charge of $34.1 million from a write-down of Mexican non-current assets, a $10.4 million post-ARG sale adjustment and $1.1 million litigation settlement. Excluding impairment and related charges, GWI's Mexican operations posted an operating loss of $2 million compared with operating income of $1.2 million in third-quarter 2005.

The charges and adjustments caused GWI’s third-quarter operating ratio to soar to 110.1 compared with 77.1 in the same 2005 period. Excluding all adjustments, the quarterly operating ratio is 79.9.

In October 2005, Hurricane Stan damaged Ferrocarriles Chiapas-Mayab S.A. de C.V.’s line. Since then, GWI’s subsidiary railroad has been working with the Mexican Ministry of Communications and Transportation and other government agencies to develop a reconstruction plan, which called for work to begin by year’s end. However, Mexico’s National Water Commission and other agencies have “significantly increased the cost of the reconstruction project and made the timetable to completion uncertain,” GWI said.

“The increased cost and indefinite timing of the Chiapas rail line reconstruction have resulted in an unsustainable business,” said GWI Chairman and Chief Executive Officer Mortimer Fuller in a prepared statement. “We are working closely with the Mexican government to resolve the situation as expeditiously as possible and are considering all alternatives.”

In the “good news” department, GWI’s third-quarter traffic rose 10.6 percent and revenue increased 21.9 percent to $128.3 million compared with similar 2005 data.


Contact Progressive Railroading editorial staff.

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