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Rail News: Financials

KCS drives up revenue and income, drives down operating ratio

The seventh Class I to report first-quarter financial results, Kansas City Southern is hardly in last place when it comes to financial perfomance.

The Class I posted revenue of $411.3 million, a 6 percent increase compared with first-quarter 2006. Coal, chemical/petroleum products and intermodal revenue rose 13.3 percent, 12.5 percent and 11.6 percent, respectively. Automotive was the only commodity group that posted a decline, dropping 8.5 percent.

“The 6 percent growth in revenues is indicative of the yield improvement in the North American railroad industry,” said KCS Chairman and Chief Executive Officer Michael Haverty in a prepared statement. “We are encouraged that some of our strongest revenue growth has come in areas that traditionally provide attractive margins.”

In addition, KCS’ first-quarter net income more than doubled to $17 million, operating income climbed 18.1 percent and operating ratio improved 1.8 points to 82.4. Quarterly operating expenses totaling $338.9 increased only 3.6 percent compared with first-quarter 2006.

The improved operating ratio is “due to concerted efforts across the company to control costs and improve revenues in spite of difficult winter conditions that had substantial impacts on both our operations and those of our interchange partners,” said Haverty.

The Class Is typically produce their highest operating ratios in the first quarter, he said.

“That KCS was able to trim almost two points from last year’s operating ratio, even with less than ideal operating conditions, certainly helps set us up for meeting our stated goal of a 2007 operating ratio below 80 percent,” said Haverty.

Contact Progressive Railroading editorial staff.

More News from 4/26/2007