GATX Profit Slashed 42 Percent

GATX Corporation profit fell 42 percent to $27.6 million in the first quarter as demand for railcars and barges declined, depressing both fleet utilization and lease rates.

With rail customers beginning to feel the stress of the global recession, the company, which controls one of the largest railcar fleets in the world, took part of the pressure with fleet utilization in North America at 96.5 percent, down from 97.9 percent at year end. Lease renewal rates declined 5.5 percent.

Marine charter rates took a turn for the better in some markets, the company said, but they had declined significantly in the fourth quarter and remain weak in the first quarter compared to recent years.

“American Steamship Company (a GATX subsidiary) recently commenced its sailing season, and it is clear that continued idling of steel manufacturing capacity on the Great Lakes will result in significantly lower iron ore shipments during the year,” said Brian A. Kenney, president and chief executive officer of GATX.

Despite that outlook, the company maintained its earnings forecast for the year. The first quarter results include a negative after-tax fair-value adjustment of $11.6 million related to certain interest rate swaps at GATX’s AAE Cargo affiliate.

“We entered the year anticipating considerable challenges in our markets and operating conditions have been consistent with our expectations,” said Kenney.

Contact Thomas L. Gallagher at tgallagher@joc.com .