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Rail News: Financials

Genesee & Wyoming boosts North American revenue and income despite struggling Mexican operations

Yesterday, Genesee & Wyoming Inc. (GWI) reported it earned first-quarter net income of $14 million, a 28.6 percent increase compared with first-quarter 2005. Net income from North American operations rose 47.8 percent to $12.6 million.

GWI’s quarterly North American revenue of $113 million increased 34.4 percent, operating income of $22.1 million rose 54.7 percent and operating ratio of 80.5 improved 2.5 points compared with first-quarter 2005. However, Mexican operations — which continue to recover from damage caused by Hurricane Stan in September — reported an operating loss of $300,000.

“Our U.S. and Canada operations performed well ahead of our expectations,” said GWI Chairman and Chief Executive Officer Mortimer Fuller III in a prepared statement. “In contrast, our Mexico operations continue to struggle as we reconfigure traffic flows and maintain our dialogue with the Mexican authorities regarding rebuilding the washed-out segment of the line.”

In Australia, GWI’s half-owned Australian Railroad Group (ARG) generated quarterly revenue of $83.7 million, a 0.8 percent decrease compared with first-quarter 2005 primarily because of a weak Australian dollar. Operating income fell 25 percent to $10.5 million and ARG’s operating ratio went up 3.8 points to 87.4. During the quarter, Cyclone Clare washed out track in western Australia and a third-party operator had two derailments on ARG’s track.

By the end of the second quarter, GWI expects to close on a $956 million deal with Queensland Rail and Babcock & Brown Ltd., which will purchase ARG’s western Australia operations and certain assets. GWI also plans to complete a deal with ARG partner Wesfarmers’ Ltd. under which GWI will buy ARG’s remaining southern Australia and Northern Territory operations for $15 million.

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More News from 5/3/2006