KCS Q3 earnings slip amid falling volumes, revenues

Kansas City Southern’s net income fell 9.1 percent to $121 million in the third quarter of 2016 on revenues that slipped 4.3 percent compared to the previous year, according to the company’s most recent financial statements.    Kansas City Southern (KCS), 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 9.1 percent year-over-year to $121 million in the third quarter of 2016.
   Net earnings per diluted share (EPS) slipped from $1.20 per diluted share in Q3 2015 to $1.12 per diluted share in Q3 2016, missing analyst expectations by $0.10 per share. Excluding the impacts of foreign exchange rate fluctuations, adjusted diluted EPS stood at $1.22 per share, compared with $1.03 per share the previous year.
   KCS’ revenues dropped 4.3 percent year-over-year to $604.5 million for the quarter, but managed to beat expectations by $1.82 million. Excluding the impacts of foreign exchange rate fluctuations and lower U.S. fuel prices, revenues would have decreased by 1 percent compared to the third quarter of 2015, according to the company’s most recent financial statements.
   The Kansas City, Mo.-based Class I railway posted similar results last quarter, when earnings were up 6.7 percent to $120 million compared with the same 2015 period.
   KCS reported an operating ratio of 66.9 percent for the third quarter, a 1.7 point improvement from 65.2 percent the previous year.
   Carload volumes at the railway were down 4 percent year-over-year to 562,000 units.
   “Kansas City Southern faced a challenging third quarter as extraneous events, including flooding outages and service disruptions on our Mexican network, resulted in additional operating costs,” KCS President and CEO Patrick J. Ottensmeyer said of the results. “In spite of these events, KCS’ third quarter carloads grew 5 percent sequentially with strength seen in both the Automotive and Energy commodity groups.”