Net profit at Kansas City Southern dropped 63 percent to $69 million in 2009, as the company came through a business environment in the first five months that Chairman and CEO Michael R. Haverty called “the most difficult that I have experienced in my railroad career.”
But the second half, and especially the fourth quarter, showed marked improvement. Volume was down just 1 percent in the fourth quarter compared with a year earlier. Revenue fell 4 percent year-over-year, but it increased 5 percent compared with the third quarter. Operating expenses decreased 5 percent year-over-year, and operating income edged up 1 percent. Rates were not strong in the fourth quarter, but notable year-over-year revenue improvements came in chemical and petroleum cargos (up 12 percent), and intermodal shipments (up 3 percent).
Net profit for the fourth quarter was $34.9 million, down 11 percent from the prior year quarter.
“We were encouraged that the positive business momentum KCS experienced in the third quarter continued for the remainder of the year,” said Haverty. “Particularly gratifying was the significant pick-up of KCSM traffic. Given its importance in terms of North American manufacturing, the business upswing in Mexico, which has continued into the early weeks of 2010, suggests that the economy is gradually gaining momentum.”
Haverty expressed cautious optimism about maintaining volume and revenue growth throughout 2010 with stronger pricing and more cross-border intermodal traffic.
Contact Thomas L. Gallagher at email@example.com.