KCS revenues, earnings slip in 2015

Kansas City Southern full-year net income in 2015 was down nearly 4 percent on revenues that fell 6 percent compared to the previous year, according to the company’s most recent financial statements.    Kansas City Southern, a transportation holding company that owns the Kansas City Southern Railway Company, Kansas City Southern de México, S.A. de C.V., and a 50 percent interest in Panama Canal Railway Company, reported net earnings fell 3.8 percent year-over-year to $485 million for the full year in 2015.
   Net earnings per diluted share (EPS) fell from $4.55 per diluted share in 2014 to $4.40 per diluted share in 2015 on revenues that dipped 6 percent to $2.4 billion.
   For the fourth quarter, net income at KCS was relatively flat, falling 1.4 percent to $140 million ($1.28 per diluted share) despite revenues dropping 7 percent to $598 million compared to the fourth quarter of 2014.
   Even so, KCS beat the street consensus EPS expectations of $1.10 per share and investment firm Stifel’s projection of $1.13 per share, according to an industry advisory note from Stifel. “The big driver of the better than expected results was a lower than expected operating ratio,” the firm said.
   KCS reported an operating ratio of 63.4 percent for the fourth quarter of 2015, a 3.3 point improvement from 66.7 percent in fourth quarter 2014.
   Carload volumes at the railway fell 2 percent year-over-year in Q4 2015.
   “KCS’ ability to react to a rapidly changing market and operational conditions was clearly evidenced during the fourth quarter in which not only did the Company have to contend with an unsettled economy but also with a hurricane in Mexico and floods in a key section of its U.S. rail network,” CEO David L. Starling said of the results. “Despite these challenges, KCS attained a fourth quarter 2015 operating ratio of 63.4%, a 3.3 point improvement from the prior year. System velocity and system dwell metrics also improved, returning KCS to the top tier of Class I railroads in these categories.”
   “Though our industry still must contend with economic uncertainty in 2016, the progress we have made during 2015 gives us confidence that KCS is positioned to maximize its near-term and longer-term business opportunities,” he added.