Friday, October 19, 2012

KCS posts record third-quarter revenues

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Despite record revenue for the third quarter, Kansas City Southern earnings of $90 million, or 82 cents per share, fell from $99.8 million, or 91 cents per share, in the comparable quarter in 2011, due in part to a higher Mexican tax bill affecting its Kansas City Southern de Mexico operations.

But the Class I railroad maintained its full-year outlook of revenue growth in the mid-single digits, citing strength in automotive and cross-border freight volumes. Wall Street responded favorably, as shares of KCS rose on Thursday. Shares were up 2.78% at $79.53 in mid-morning trade Friday on the New York Stock Exchange.

KCS's third-quarter revenue of $577 million was a record, and up 6% from the year-ago quarter. The railroad's operating ratio of 68.7% was a 2.6 point improvement from its ratio of one year ago.

Revenue growth was led by a 31% increase in the railroad's Automotive sector and a 25% increase in Intermodal revenue. Energy-related revenue increased 8% from a year ago; while revenue KCS's Chemical & Petroleum and Industrial & Consumer segments grew by 4% and 1%, respectively, in the third quarter.

"The combination of solid top line growth and disciplined operating performance resulted in KCS delivering a third quarter operating ratio of 68.7%, the best in the Company's history," said KCS President and CEO David L. Starling.

"Revenues were primarily driven by KCS' five fastest growing categories— automotive, cross-border intermodal, container traffic through Lázaro Cárdenas, crude oil and frac sand," Starling said. "Collectively, these five categories, which represent approximately 18% of total KCS freight revenues for the third quarter, grew by 46% when compared to the third quarter 2011, and we believe that there is significant long term growth potential in each of these areas."