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Rail News Home Financials

11/3/2004



Rail News: Financials

Hurricane aftereffects eat up portion of Florida East Coast's third-quarter revenue, profit



Despite two brief shutdowns caused by a couple of strong hurricanes during the third quarter, Florida East Coast Railway's (FECR) revenue rose 3.4 percent to $46.3 million — the fifth-straight quarter the railroad has posted revenue growth. The increase was driven by a 15 percent rise in intermodal revenue compared with third-quarter 2003.

However, officials at FECR parent Florida East Coast Industries Inc. (FECI) estimate the hurricanes' aftereffects reduced the 351-mile regional's quarterly revenue by about $4.5 million and increased operating expenses about $2 million because of costs associated with clean-up work, property damage, additional train crews and grade crossing operations. In addition, quarterly carload revenue dropped 5.8 percent because of suspended or limited train service after the storms.

The hurricanes' total net impact to FECR's third-quarter operating profit — which declined 28 percent to $7.8 million compared with third-quarter 2003 — is estimated at $4 million. The railroad's quarterly operating expenses rose 13 percent to $38.4 million and operating ratio worsened 7.2 points to 83.1 compared with the same 2003 period.

"Although the railway's third-quarter results were impacted by an unprecedented four hurricanes, I am pleased to note that the railway resumed operations in plenty of time to service its customers during our peak season and to accommodate increased activity associated with Florida's reconstruction effort," said FECI Chairman, President and Chief Executive Officer Robert Anestis in a prepared statement.

During 2004's first nine months, FECR increased revenue 8 percent to $144.9 million and operating profit, 2.5 percent to $31.6 million compared with the same 2003 period. But operating expenses rose 10 percent to $113.3 million and the regional's nine-month operating ratio worsened 1.2 points to 78.2.

"The railway results for the first eight months, prior to the hurricanes, were very strong with revenues up 11 percent," said Anestis. "We expect this momentum to continue into the fourth quarter with double-digit percentage increases in railway segment revenues and operating profit compared to the fourth quarter of 2003."


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