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Rail News Home Rail Industry Trends

7/27/2010



Rail News: Rail Industry Trends

KCS posts 35 percent revenue increase, sets operating ratio record


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This morning, Kansas City Southern (KCS) reported second-quarter revenue of $461.6 million, a 35 percent increase compared with revenue posted during the same 2009 period — the latter being KCS’ weakest revenue quarter during the economic downturn.

“A year ago, KCS was in the depths of the worst freight recession since the Great Depression,” said KCS Chairman and Chief Executive Officer Michael Haverty in a prepared statement. “Over the last year, we have seen a steady improvement in traffic levels.”

Carloadings increased 24 percent in the second quarter compared with Q2 2009’s total, and “slightly exceeded” pre-recession 2008 second quarter volumes, Haverty said. Accordingly, KCS automotive revenue was up 292 percent on increased auto production in Mexico; intermodal revenue was 54 percent higher than the total recorded during the same period last year as new business lanes and organic volume growth continued to improve. Other period-over-period revenue improvements: a 42 percent increase for agriculture and minerals; 31 percent for industrial and consumer products; 25 percent for coal; and 18 percent for chemical and petroleum.

For the quarter, KCS registered operating income of $127.2 million, a 195 percent increase from the year-ago level. The Class I posted a Q2 operating ratio of 72.4 — a record for KCS — compared with 87.4 for the same 2009 period. Operating expenses increased 12 percent compared with Q2 2009’s total.

More good news for KCS: On July 24, Kansas City Southern de México S.A. de C.V. (KCSM) reopened the Anahuac Bridge. If there was no settlement resulting from trains operating over the bridge’s approaches, KCSM officials expected to operate up to 25 to 30 trains over the Nuevo Laredo gateway by late last night, and planned to remove all service embargos established on July 3 in the aftermath of Hurricane Alex.

Rail service in northern Mexico was disrupted for all carriers as a result of Hurricane Alex, which made landfall in northeast Mexico on June 30. Highway infrastructure throughout northern Mexico also was severely damaged. The hurricane caused significant track damage around the Monterrey and Saltillo areas, as well as on the lines to Nuevo Laredo and Matamoros.



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