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Rail News: Kansas City Southern

KCS' revenue and income climb, expenses fall in third quarter


It wasn’t a record-setter in the vein of other Class Is, but the third quarter was a good one nonetheless for Kansas City Southern. Revenue increased 8.1 percent to $415.7 million, operating income more than doubled to $77.3 million, operating expenses fell 3 percent to $338.4 million and KCS’ operating ratio improved to 81.4 compared with similar 2005 data.

Revenue growth was driven by a 1.9 percent increase in traffic volumes, KCS said. Intermodal, paper and forest products, and agricultural and minerals revenue rose 24.8 percent, 10.3 percent and 10 percent, respectively. In addition, revenue per carload increased 6.3 percent compared with similar 2005 data.

Operating expenses decreased despite an 11.4 percent jump in fuel costs. KCS registered a 31.4 percent reduction in casualties and insurance expenses, excluding a prior-year adjustment related to personal injury claims, the railroad said.

Meanwhile, quarterly net income soared to $26.4 million compared with $1.9 million in third-quarter 2005.

“Volume growth improving overall operations and our continued progress in containing costs were major contributors to a positive third quarter,” said KCS Chairman and Chief Executive Officer Mike Haverty in a prepared statement. “U.S. operations improved significantly in the quarter, which is a product of better locomotive utilization, the positive impact of our capacity-enhancing projects and a sharp focus on operational efficiencies.”

During 2006’s first nine months, KCS’ revenue totaled $1.2 billion, up 26.3 percent compared with similar 2005 data. Operating income skyrocketed 1,390 percent to $216.1 million, but operating expenses increased 5.5 percent to $1 billion.

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More News from 10/31/2006