Hurricanes dent Kansas City Southern profits
Kansas City Southern said hurricanes Katrina and Rita were a major factor behind the railway’s fourth quarter net loss of $1.2 million, compared to net income of $700,000 in the fourth quarter of 2004.
“The hurricanes had significant impacts on both revenues and expenses in the quarter. Katrina resulted in the rerouting of Class I connecting rail traffic away from the Gulf region, which caused congestion along parts of the KCSR system, as well as disrupting locomotive and freight car positioning and availability,” said Michael R. Haverty, KCS’s chairman, president and chief executive officer.
“Hurricane Rita had an even greater impact on revenues than Katrina. Twenty chemical plants and refineries were closed for varying periods in the fourth quarter and virtually all of the Gulf Coast plants served by KCSR operated at less than full capacity throughout the quarter. The forced closure of the New Orleans and Gulfport intermodal ramps also resulted in lost revenues.”
“The total impact to fourth quarter U.S. revenues of the hurricanes was approximately $9.8 million, and the total revenue impact for the final four months of 2005 was approximately $14 million. In the first quarter of 2006, all chemical plants served by KCSR are back in operation, although three remain at less than full capacity,” Haverty said.
Despite the hurricanes, KCS’s quarterly operating income jumped 70 percent to $46.6 million, from $27.4 million in the fourth quarter 2004.
KCS revenue soared 122 percent to $388.2 million from $174.6 million a year ago.
For the full year, KCS’s net income was up 287 percent to $94.4 million, compared to $24.4 million posted in 2004. Operating income dropped 27 percent to $61 million, from $83.5 million. KCS’s revenues increased 111 percent to a record $1.35 billion from $639.5 million, which KCS largely attributed the acquisitions of the Texas Mexican Railway Co. (Tex Mex) and Kansas City Southern de Mexico (KCSM).
In the third quarter, KCS received a one-time non-cash gain of $134.7 million following the Sept. 12 settlement of a long running dispute with the Mexican government concerning the payment of a value-added tax refund to KCS subsidiary TFM.
The company’s operating expenses increased 132 percent in 2005 to $1.29 billion, which included a fuel bill of $206.9 million, up 141 percent from $66.4 million in 2004.
KCS said its consolidated traffic volume increased 74 percent to 1.79 million car loadings in 2005.