Kansas City Southern Profit Hit By Debt Charges, Revenue Tops View - Update

(RTTNews) - Freight rail transporter Kansas City Southern (KSU), Friday reported a sharp decline in second-quarter profit, hurt mainly by debt retirement charges, higher operating costs, and foreign exchange losses.

Revenues for the quarter improved from a year ago to top Wall Street estimates, on growth across all segments, with the exception of Agriculture and Minerals, amid a three percent improvement in carload volumes and rates.

The Kansas City, Missouri-based company reported second-quarter net income to common shares of $15 million or $0.14 per share, sharply down from $120 million or $1.09 per share last year.

Results for the reporting quarter included debt retirement costs of $111 million.

Excluding items, adjusted earnings for the quarter were $0.96 per share, compared with $0.88 a year ago.

On average, 18 analysts polled by Thomson Reuters expected earnings of $0.95 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter were higher at $579 million, compared with $545 million in the prior year. Analysts had consensus revenue estimate of $576.67 million for the quarter.

Among segments, Chemical and Petroleum revenues grew 11 percent from last year, and Industrial & Consumer Products were up 4 percent. Energy revenues were up 26 percent, Intermodal climbed 13 percent, and Automotive was up 20 percent.

Meanwhile, Agriculture and Minerals segment revenues slid 18 percent, due mainly to a drop in grain volumes owing to severe drought conditions in the U.S. Midwestern region in 2012.

Total carload volumes in the quarter grew 3 percent from a year ago to 535 thousand, and revenue per carload climbed 3 percent to $1,042.

However, operating ratio for the quarter worsened to 69 percent from 62.6 percent in the prior year. This metric defines a company's operating expenses as a percentage of revenue.

Results for the quarter were also impacted by foreign exchange losses of $22 million.

The company's stock is trading at $117.05, up 0.15%, on a volume of 503 thousand shares on the NYSE.