KANSAS CITY SOUTHERN REPORTS SHARP EARNINGS DECLINE
Kansas City Southern Industries reported first-quarter income from continuing operations of $6.3 million, down from $10.4 million for the year-earlier period.
KCSI, which comprises the Kansas City Southern Railway Co., Gateway Western Railway Co., and equity investments in Grupo TFM, Mexrail Inc. and the Panama Canal Railway Co., saw revenues dipped 3.3 percent to $144.0 million.
The Kansas City, Mo-based company said that the $4.9-million decline in revenues and $7.0-million increase in operating expenses were partially offset by $2.9 million in higher equity earnings from Grupo TFM (Grupo Transportacion Ferroviaria Mexicana S.A. de C.V., a $2.3-million decrease in interest expense and a $4.8 million reduction in income tax.
“We are obviously disappointed with our operating results for the first quarter, but continue to be optimistic about the long-term prospects of our NAFTA railway franchise,” said Michael R. Haverty, KCSI chairman and chief executive officer. “Like most other railroads, the economic slowdown had an adverse effect on our revenues, particularly in the agriculture and mineral, paper and forest and certain chemical markets where weak demand led to substantial first-quarter volume declines.”
The railroad saw a 147-percent boost in automobile volumes. But it was also strongly impacted by increase in casualty costs, due to derailments and the settlement of a personal injury claim, and increased car-hire costs, Haverty said.
KCSI announced in the first quarter it would cut about 170 jobs, or about 6 percent of its work force; implement a voluntary and temporary annual salary reduction for middle and senior management; suspend some benefits for management employees.