Kansas City Southern (KSU
107.07, -1.38) is lower by 1.3% after modestly beating earnings estimates for
the second quarter.
The rail carrier reported above-consensus second quarter earnings of $1.54 per share on a 4.0% year/year increase in revenue to $682.40 mln, which was a bit shy of expectations.
Operating ratio worsened to 64.0% from 63.5% one year ago. The increase was due to a 4.7% increase in operating expenses to $436.60 mln. Lower expenses associated with compensation & benefits and purchased services were offset by higher fuel, depreciation and amortization, and materials expenses.
Kansas City Southern President and CEO Patrick Ottensmeyer said the company expects an acceleration in volume growth during the second half of 2018 and going into 2019.
Looking at the segment breakdown, Chemical & Petroleum revenue grew 13.7% to $157.80 mln mostly due to a 23.8% increase in Plastics revenue (to $39.60 mln). Carloads increased 2.9% to 73,600 driven by a 10.2% increase in Petroleum Carloads (to 28,100). Revenue per Carload grew 10.5% to $2,114. Plastics revenue per Carload drove the growth rate, climbing 16.1% to $2,041.
Industrial & Consumer Products revenue grew 2.8% to $152.70 mln, thanks to an 11.3% increase in Forest Products revenue (to $69.20 mln), which outweighed a 5.8% decrease in Metals & Scrap revenue (to $54.00 mln). Carloads increased 2.8% to 85,000, mostly due to 5.8% growth in Forest Product Carloads (to 31,000). Revenue per Carload was little changed at $1,796.
Agricultural & Minerals revenue increased 1.4% to $125.10 mln. Grain revenue rose 3.2% to $75.40 mln while Food Products revenue fell 4.7% to $36.30 mln. Carloads were little changed at 62,600 while revenue per Carload ticked up 0.9% to $1,998.
Energy revenue declined 19.9% to $56.50 mln, mostly due to a 38.7% decline in Utility Coal revenue (to $23.90 mln). Carloads declined 17.7% to 57,300, driven by a 29.7% decline in Utility Coal Carloads (to 27,000) and a 19.5% decline in Frac Sand Carloads (to 7,000). Revenue per Carload fell 2.7% to $986 as a 12.9% decline in Utility Coal revenue per carload (to $885) and a 6.8% decline in Frac Sand revenue per Carload (to $1,500) outweighed a 38.4% increase in Crude Oil revenue per Carload (to $1,557).
Intermodal revenue grew 3.4% to $93.70 mln while Carloads increased 3.3% to 251,200. Revenue per Carload was little changed at $373.
Automotive revenue jumped 17.0% to $67.30 mln while Carloads increased 12.1% to 42,500. Revenue per Carload grew 4.4% to $1,584.
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