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Rail News: Kansas City Southern

Year-end financial statement: KCS sets revenue, income records; slashes operating ratios


A healthy North American economy and fluid operations helped Kansas City Southern set fourth-quarter and full-year revenue and operating income records. Today, the Class I reported quarterly and full-year revenue of $173.7 million and $639.5 million, an 18.2 percent and 10 percent increase, respectively, compared with the same 2003 periods. KCS now has registered seven straight quarter-over-quarter revenue gains.

Quarterly operating income totaled $31.7 million compared with a $6.8 million loss in fourth-quarter 2003, while full-year operating income rose more than 100 percent to $101 million compared with 2003. KCS' quarterly and full-year operating ratios of 81.8 and 84.1 improved 5.1 points and 4.5 points, respectively.

However, quarterly expenses of $142 million rose 11.1 percent and full-year expenses of $534.7 million increased 5 percent compared with similar 2003 periods, primarily because of higher fuel costs, which KCS partially recovered through fuel surcharges.

"After a number of years of improving infrastructure, strengthening operations, and re-energizing marketing and sales efforts, KCS made good progress toward achieving its principal financial and operational goals in 2004," said Chairman, President and Chief Executive Officer Mike Haverty in a prepared statement. "The pace of growth escalated as the year progressed, which bodes well as we move into the first half of 2005."

TFM S.A. de C.V.'s fourth-quarter carloads rose 13.7 percent, but revenue totaling $173.5 million dropped 1 percent and operating income totaling $32.1 million decreased 2 percent compared with fourth-quarter 2003. Last month, KCS reached an amended sales agreement with Grupo TMM S.A. to obtain TMM's 51 percent stake in TFM. The transaction requires KCS shareholder approval, which KCS officials expect to obtain by March.

"KCS has already begun putting a transition team on the ground in Mexico under the direction of our former Chief Operating Officer Gerald Davies," says Haverty. "While TFM will continue to be a separate company operating under KCS, the improved integration between TFM and Kansas City Southern Railway will greatly enhance service as well as provide significantly greater growth potential, both within Mexico and for cross-border business."

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More News from 1/31/2005