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Revenue growth was led by a 19% increase in Chemicals and Petroleum due to an increase in shipments related to Mexican energy reform, and a 5% increase in Automotive. These increases were partially offset by revenue declines in the remaining four commodity groups. Energy revenues declined by 5%, as increased Utility Coal shipments were more than offset by declines in Frac Sand and Crude Oil. Industrial & Consumer Products and Agriculture & Minerals revenues each declined by 2%, and Intermodal revenues declined by 1%.
For 2Q19, KCS’s reported operating expenses were $506 million. Excluding restructuring charges related to PSR (Precision Scheduled Railroading) initiatives, adjusted operating expenses were $455 million, 4% higher than 2018. Adjusted operating income was $259 million, 5% higher than a year ago. The adjusted second-quarter operating ratio of 63.7% was 130 basis points lower than 2Q18’s 64.0%. However, the reported OR was 70.9%.
KCS’ net income in 2Q19 was $129 million, for a reported $1.28 per diluted share, compared with $148 million, or $1.45 per diluted share last year. Adjusted diluted EPS was $1.64, 6% higher than a year ago, and a record.
For the first six months of 2019, KCS posted revenues of $1.39 billion, 5.3% higher than 1H18’s $1.32 billion. Operating income dropped 26%, from $464.5 million in 1H18 to $368.3 million in 1H19. Operating expenses of $1.02 billion were 17.9% higher than 1H18’s $856.5 million, based on $118 million in restructuring charges. Diluted EPS for 1H19 was $2.30, compared to $2.85 in 1H18.
“[KCS] is handling the same volume as last year with fewer assets, fewer crew starts and considerably less network congestion, driving an improvement in customer service, operating metrics and cost profile,” said KCS President and CEO Patrick J. Ottensmeyer. “This improvement in cost profile helped us absorb a 130 basis point headwind to our adjusted operating ratio from the loss of the Mexican Fuel Excise Tax credit, while still improving profitability versus the prior year. I am extremely pleased with the commitment, enthusiasm and cross-functional teamwork that my Kansas City Southern colleagues have demonstrated in the early stages of executing Precision Scheduled Railroading principles. Together we are building a more consistent, reliable and resilient network that is positioned to deliver excellent customer service and strong operating leverage as volume and revenue growth improves.”
The post KCS 2Q19: Volume flat, but revenues reach record appeared first on Railway Age.
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