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Rail News: Short Lines & Regionals

G&W posts lower Q3 operating revenue, income


Genesee & Wyoming Inc.'s (G&W) third-quarter 2016 operating revenue fell 8.3 percent to $501 million, while operating income dropped nearly 22 percent to $91.9 million compared with last year's third-quarter results, the company announced today.

Reported diluted earnings per share declined 10.9 percent to 98 cents compared with third-quarter 2015.

G&W reported net income of $56.8 million, compared with net income of $63.4 million in third-quarter 2015.

Results were consistent with expectations with a diluted EPS of 98 cents and adjusted diluted EPS of 95 cents, said G&W President and Chief Executive Officer Jack Hellmann in a press release.

"In North America, better than expected steam coal shipments combined with strong cost controls yielded a better than expected operating ratio of 71.9 percent," said Hellmann.

In Australia, financial results were in line with G&W's outlook, as the company continued to "effectively manage costs in the weak commodity environment," he said.

"In the U.K./Europe, our financial results in the first full quarter since we restructured the U.K. coal business were below our expectations for three reasons: congestion in the port of Felixstowe which weakened U.K. intermodal shipments; unscheduled reductions in U.K. infrastructure services; and weak performance from continental European intermodal," said Hellmann.

Looking ahead to the year's end, G&W's priorities include maximizing cost efficiency in North America; closing on the Glencore Rail acquisition and the concurrent issuance of a 49 percent stake in the Macquarie subsidiary; and continuing to restructure European business and lower costs in the United Kingdom, said Hellmann.

"Despite the weak third quarter, we see a clear path to improvement in the U.K./European segment as we finish the year and enter 2017," he said.

Over the past three months, G&W announced two key acquisitions: the Glencore Rail acquisition in Australia, which is expected to close Dec. 1; and the Providence and Worcester Railroad in Massachusetts, which is expected to close into a voting trust later today.

"In addition, we continue to be active with a significant pipeline of acquisition opportunities in multiple geographies for which we are maintaining close working relationships with potential financial partners," he said. "The broad reach of our global rail footprint is yielding an increasing number of contiguous or adjacent investment opportunities."

Contact Progressive Railroading editorial staff.

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