KCS 3Q earnings and revenue rise

Kansas City Southern Friday morning reported third-quarter 2011 diluted earnings of $100 million, or 91 cents per share, up from $50 million or 48 cents per share in the third quarter of 2010. Adjusted for impacts related to Hurricane Alex in 2010, a 2010 post-employment expense benefit, and debt retirement costs, diluted earnings per share were $0.78 and $0.59, respectively.

KCS’ operating income increased 57%, and revenue of $545 million up 24%, compared with the third quarter of 2010. Adjusted for last year’s estimated revenue loss due to Hurricane Alex, revenue increased 16%. Overall, KCS said, carload volumes were 13% higher than last year or 7% higher adjusted for the hurricane.

The Class I railroad’s operating ratio for the quarter, adjusted for the hurricane-related impact, was 71.3%, or 66.6% on a reported basis.

Much like other Class I railroads reporting in the third quarter, KCS said operating expenses of $363 million were 13% higher than the corresponding 2010 period, primarily due to higher volumes and fuel expense, with compensation and benefits expense additional factors. The increase in fuel expense was primarily the result of higher average fuel prices in the third quarter of 2011 and reduced fuel consumption in the third quarter of 2010 resulting from the extended closure of the main KCSM rail corridor due to Hurricane Alex, KCS said.

“Kansas City Southern reported solid third quarter 2011 results,” stated President and CEO David L. Starling. “The company posted record carloadings and revenues and experienced strong year-over-year and sequential growth.

“While there persists an understandable level of anxiety in the financial markets over the state of the economy, KCS has experienced consistent growth,” Starling said. “With the weather challenges behind us, we remain confident that our mid-single digit volume and mid-teen revenue growth guidance for 2011 is attainable.”