Rail transportation services provider Kansas City Southern (KSU) reported Thursday a decline in fourth-quarter profit, reflecting a 4% decrease in revenues. Earnings per share, however, came in above Street view. The company also said with caution that it will be able to maintain the positive volume and revenue growth momentum that it experienced in the second half of 2009 throughout the subsequent year.
For the fourth quarter, net income available to common shareholders decreased to $32 million or $0.33 per share from $36.4 million or $0.40 per share in the previous year. On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $0.29 per share in the fourth quarter. Analysts' estimate typically excludes special items.
Revenues for the period slid 4% to $406.8 million from $423.8 million in the fourth quarter of the prior fiscal year. Six analysts were expecting revenue of $397.19 million in the fourth quarter.
Segment-wise chemical & petroleum revenues grew 12% to $84.1 million from $74.9 million, and intermodal revenue improved 3% to $42.3 million from $41.2 million in the year-ago quarter. Industrial & Consumer Products revenue dipped 3% to $92.7 million from $106.2 million, while Agriculture & Minerals revenue slid 9% to $102.2 million from $112.7 million, and Coal revenue decreased 7% to $47.9 million from $51.3 million. Automotive remained flat year-over-year at $20 million.
Kansas City Southern noted that volumes for the three month period were down just 1%, compared to the past year.
Operating income edged up 1% to $91.9 million from $91.2 million, as operating expenses declined to $314.9 million from $332.6 million.
Compensation and benefits swelled to $88.3 million from $78.6 million, attributable to foreign exchange rate impacts on the Mexico statutory profit sharing obligation, and lower capitalized labor due to the reduced capital program in 2009.
Interest expense increased to $45.3 million from $36.2 million, as a consequence of refinancings executed a year earlier, the company said.
Further, the results of the latest quarter benefited from foreign exchange gain of $2.7 million, compared to loss of $21.7 million last year. Reversing the effect, the company recorded an income tax expense of $17.7 million, compared to a gain of $2.7 million in the prior-year quarter.
For the full year, net income fell to $57 million or $0.61 per share from $168.7 million or $1.86 per share in fiscal 2008. Revenues dropped to $1.48 billion from $1.85 billion, on account of a $122 million drop in fuel surcharge revenue.
Looking ahead, Chief Executive Michael Haverty, said, "KCS management is cautiously optimistic that the Company will be able to maintain the positive volume and revenue growth momentum that it experienced in the second half of last year throughout 2010. A continued strong pricing environment, new and renewed business contracts and the growth of our cross-border intermodal product, including the introduction of six-day service between central Mexico and Atlanta, will be important catalysts in KCS' rebound."
KSU is currently trading at $31.70, up 1.12%, on the NYSE.
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