Industry News

KCS 2Q Profit Drops

July 30, 2009 | 02:40 p.m. CDT

Kansas City Southern reported a much smaller second-quarter profit as the economy and lower fuel prices slashed revenue by 30 percent, reports The Associated Press.

KCS said it earned $6.7 million, or 7 cents per share, during the three months ending June 30. By comparison, it earned $50.5 million, or 56 cents per share, during the same period a year ago. Revenue during the quarter fell 30 percent to $341.3 million.

"The first six months of 2009 presented KCS with the harshest business environment in many decades," CEO Michael Haverty said. Volume fell in all categories for a total decline of almost 19 percent, while much lower fuel prices from a year ago caused revenue from fuel surcharges that customers pay on their shipments to decline by 72 percent.

Railroad officials said they offset some of the damage by cutting operational costs 22 percent from a year ago, including a reduction in insurance, fuel and employee expenses. The railroad's operating ratio was 87.3 percent, compared with 78.5 percent a year ago and 86.0 percent in first quarter 2009

Haverty expressed "cautious optimism" about the second half of the year, saying he's seen signs that business in the U.S. and Mexico is stabilizing. He also said the company has completed construction of a new 90-mile rail line between Victoria and Rosenberg, Texas, that he said will provide cheaper and more efficient access to U.S. and Mexican markets.