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RAIL EMPLOYMENT

Rail News Home Kansas City Southern

10/21/2011



Rail News: Kansas City Southern

KCS sets third-quarter volume, revenue records


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Despite the sluggish economy and traffic disruptions caused by heavy Missouri River floods, Kansas City Southern set a few records in the third quarter, including carload volume. Revenue jumped 24 percent to a record $545 million and carloadings increased 13 percent to a record 518,000 units compared with third-quarter 2010 results. When adjusted for last year’s estimated revenue loss from Hurricane Alex, revenue rose 16 percent, KCS officials said in a prepared statement.

Automotive revenue skyrocketed 58 percent to $36.7 million and volume climbed 16.5 percent to 21,400 units; intermodal revenue jumped 38 percent to $65.7 million and volume leaped 22 percent to 208,000 units; industrial and consumer products revenue soared 32 percent to $136.8 million and volume climbed 16 percent to 86,800 units; chemical and petroleum revenue rose 19 percent and volume increased 7 percent to 65,300 units; coal revenue jumped 17 percent to $74.4 million and volume was flat at 74,300 units; and agriculture and minerals revenue rose 11 percent to $108.1 million and volume was flat at 62,200 units.

In addition, operating income soared 57 percent to $182 million and net income doubled to $100 million. When adjusted for hurricane-related impacts, operating income rose 19 percent and diluted earnings per share totaled 78 cents versus an unadjusted 91 cents. KCS’ operating ratio dropped 6.9 points to 66.6; the hurricane impact-adjusted ratio decreased 0.7 points to 71.3.

“Kansas City Southern reported solid third-quarter results … and experienced strong year-over-year and sequential growth,” said KCS President and Chief Executive Officer David Starling. “These achievements are all the more impressive given the operating challenges caused by prolonged flooding in the Midwest, particularly along the Missouri River. The flooding resulted in the closure of a primary rail line into Kansas City from mid-June through Labor Day, which significantly disrupted grain and coal traffic.”

However, operating expenses climbed 13 percent to $363 million — and rose 14 percent when adjusted for hurricane-related impacts — primarily because of increased volumes and higher fuel and compensation/benefits expenses. Fuel costs jumped 40 percent to $86.5 million due to higher average diesel prices and reduced fuel consumption in third-quarter 2010 from the extended closure of a main Kansas City Southern de México S.A. de C.V. corridor due to Hurricane Alex. Compensation and benefit costs climbed 25 percent to $109.3 million primarily because of wage rate increases, higher volumes and the decreased value of the Mexican peso versus the U.S. dollar.

Although “an understandable level of anxiety in the financial markets over the state of the economy” persists, KCS has experienced consistent growth and expects that growth to continue, said Starling.

“With the weather challenges behind us, we remain confident that our mid-single-digit volume and mid-teen revenue growth guidance for 2011 is attainable,” he said.


Contact Progressive Railroading editorial staff.

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