Thursday, GATX Corp. (GMT) reported a lower profit for the fourth quarter, hurt by across-the-board decline in revenues. The company's lease rates in the rail segment remained under pressure due to "the weakest rail market in decades". GATX's two other segments, Specialty and American Steamship Company, also suffered downfalls in revenue as the company witnessed "depressed markets" in its Specialty segment while American Steamship was hit by low levels of iron ore shipments on the Great Lakes.
The Chicago, Illinois-based company, which provides leasing services for transportation assets, revealed its fourth-quarter net income decreased to $21.5 million or $0.45 per share from $28.9 million or $0.58 per share a year ago.
Fourth quarter results include a $7.4 million or $0.15 per share tax benefit related to realized foreign tax credits and a $2.2 million or $0.05 per share after-tax unrealized loss associated with interest rate swaps at GATX's European rail affiliate AAE Cargo. Fourth quarter results of 2008 include a $6.1 million or $0.12 per share after-tax unrealized loss associated with AAE swaps.
On average, five analysts polled by Thomson Reuters estimated earnings of $0.36 per share for the quarter.
Revenues for the quarter dropped to $302.5 million from $323.7 million in the year-earlier quarter. Analysts expected revenues of $281.70 million for the quarter.
Lease income of GATX dipped to $226.2 million from $231.9 million, while marine operating revenue slid to $52.7 million from $66.4 million.
During the fourth quarter, lease renewal pricing on cars in GATX's Lease Price Index, or LPI, decreased 18.7% versus expiring lease rates, compared to an 8.5% decrease in the prior quarter and a 3.3% increase in the fourth quarter of 2008. The average lease term on LPI renewals during the fourth quarter was 43 months, compared to 39 months in the prior quarter and 65 months in the fourth quarter of 2008.
For full year 2009, the company's net income declined to $81.4 million or $1.70 per share from $194.8 million or $3.88 per share in the similar period of 2008. Revenue for the period decreased to $1.12 billion from $1.35 billion in the year-earlier period.
Looking forward, Brian Kenney, chief executive officer of GATX, said, "Many of the challenges we faced in 2009 will continue into 2010. The markets we serve have stabilized, but at relatively low levels. While we see some initial signs of recovery, we expect pressure on rates and utilization to continue until the economy shows sustainable improvement. As a result, we currently expect 2010 earnings to be in the range of $1.50 - $1.70 per diluted share."
For fiscal 2010, analysts at present expect earnings of $1.67 per share.
GMT is losing $1.27 or 4.46%, and is trading at $27.11 on a volume of 171 thousand shares on the New York Stock Exchange.
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