KCS logs record low operating ratio in 4Q

Kansas City Southern Thursday reported fourth-quarter net earnings of $52 million, or $0.50 per diluted share, compared to $32 million, or $0.34 per diluted share, in fourth quarter 2009. Excluding debt retirement costs related to refinancing activity in the fourth quarter 2010, adjusted diluted earnings per share was 62 cents, an 82% increase over the fourth quarter of 2009.

KCS revenue for the quarter was $479 million, up 18% from the comparable period in 2009, due to a 12% increase in carloadings, the company said. Signficantly, according to David L. Starling, KCS president and chief executive officer, “KCS’s fourth-quarter operating ratio of 71.8% improved 5.5 points from a year ago and marked the lowest quarterly operating ratio in the company’s history.

“Our business strategy is targeted toward continuous improvement of our system operations and, given a stable economy, we expect KCS to improve its annual operating ratio in future years,” Starling added.

The company noted the fourth quarter rebound also compared favorably with its third quarter 2010 results, which were “negatively impacted by service disruptions caused by Hurricane Alex.” Revenue growth occurred across all commodity groups.

For the full year 2010, revenue was $1.82 billion, up 23% over 2009 despite lost revenue from Hurricane Alex in the third quarter of 2010. Carloads for 2010 were up 15% over 2009 as the general economy improved. KCS’s full-year 2010 operating ratio was 73.2%, an 8.8 point improvement from 2009.

“A solid fourth quarter capped off a year in which KCS’s 2010 linehaul revenues exceeded 2008 levels,” stated Executive Chairman Michael R. Haverty (pictured at right). “The speed with which we recovered was truly impressive and speaks to the resiliency and vitality of the markets KCS serves and to the quality of our management who has been instrumental in the company attaining record levels of operating efficiency and profitability. We believe that KCS will continue to deliver attractive volume and revenue growth as well as sustaining a high level of operating performance in 2011.”