Transportation holding company Kansas City Southern (KSU) reported Monday a profit for the fourth quarter that increased from last year, boosted by revenue increases across all divisions, except chemical & petroleum, and a 7 percent improvement in carload volumes. Adjusted earnings per share for the quarter topped analysts' expectations, while quarterly revenues missed their estimates, which dragged the company's stock down 4 percent in extended trading.
"KCS's solid fourth quarter put the final touches on a successful 2011. The Company can point to notable achievements in all areas, including marketing and sales, finance and operations. For the first time in our railroad's 125 years, we attained over $2 billion in revenue and 2 million in carloads," President and CEO David Starling said in a statement.
The Kansas City, Missouri-based company reported net income of $95.6 million or $0.87 per share for the fourth-quarter, higher than $51.8 million or $0.50 per share in the prior-year quarter
Excluding debt retirement costs, adjusted earnings for the quarter increased to $1.01 per share from last year's $0.62 per share. On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.79 per share for the fourth quarter. Analysts' estimate typically excludes special items.
Revenues for the quarter grew 11 percent to $530.3 million from $478.60 million in the same quarter last year, but missed fifteen Wall Street analysts' consensus estimate of $549.70 million.
The improvement in revenues were led by automotive and intermodal divisions as the sales increased 30 percent and 29 percent, respectively, from last year.
Coal division sales also grew 20 percent, industrial and consumer products were up 8 percent, and agriculture and minerals sales increased 2 percent. Meanwhile, revenue in chemical & petroleum declined 1 percent from last year.
Volume for the quarter increased with carload volumes 7 percent higher than the year-ago quarter at 522 thousand.
Operating ratio for the quarter was 71.6 percent, compared to 71.8 percent in the corresponding quarter last year.
Operating expenses for the quarter was $379.9 million, up from $343.5 million in the prior-year quarter, essentially due to increase in fuel costs and incentive compensation. Operating income grew 11 percent to $150.4 million from last year.
For fiscal 2011, the company reported net income of $328.7 million or $3.00 per share, sharply higher than $169.2 million or $1.67 per share in the prior year. Analysts expected the company to report earnings of $2.86 per share for fiscal 2011.
Net revenues for the full year grew 16 percent to $2.10 billion from $1.81 billion in the previous year. Street was looking for full-year 2011 revenues of $2.12 billion. Carloads breached the 2 million annual volume threshold for the first time.
"KCS continues to have abundant growth prospects and is very well-positioned to be a leading growth company in the transportation industry. We believe that in 2012, KCS will continue on a growth trend similar to that of the past year with mid-single digit increases in volumes and pricing. We are also committed to further improvements in our operating ratio for 2012," Starling added.
KSU closed Monday's regular trading session at $72.32, down $1.07 or 1.46% on a volume of 0.93 million shares. The stock lost a further $2.97 or 4.11% in after-hours trading.
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