Thursday, January 28, 2010

KCS cuts operating ratio, beats Street

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In last year's fourth quarter, Kansas City Southern earned $32.0 million, or 33 cents ashare, on $406.8 million in revenue. While earnings declined 17.5% from the prior-year quarter, they exceeded the 29 cents that was the consensus estimate of analysts.

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"KCS management is cautiously optimistic that the company will be able to maintain the positive volume and revenue growth momentum that it experienced in the second half of last year throughout 2010," Chairman and CEO Michael R. Haverty said.

KCS reported fourth-quarter 2009 revenue of $406.8 million, a 4% decrease from the same quarter in 2008; operating income of $91.9 million, an increase of 1%; and an operating ratio of 77.4%, compared with 78.5% in 2008.

"Operating expenses for the fourth quarter 2009 were $314.9 million, a decrease of 5% year-over-year," said KCS. "Decreases were achieved in each categorywith the exception of compensation and benefits. Year-over-year fourth-quarter compensation and benefits expense increased as a result of non-cash foreign exchange rate impacts on the Mexico statutory profit sharing obligation, and lower capitalized labor due to the reduced capital program in 2009. Offsetting these compensation increases were lower salary and wage expenses resulting from reduced employee levels. Purchased services fell 17% as a result of reduced locomotive repair expenses and savings from the opening of the Victoria-Rosenberg line. Fuel expense for the quarter was down 14% on decreased average fuel prices and the efficiency of the fleet."

Operating income for the fourth quarter was $91.9 million compared with $91.2 million last year, a 1% increase. The fourth-quarter 2009 operating ratio was 77.4% compared with 78.5% a year ago.