FEC chief stresses investor prospects
Florida East Coast Industries has a bright future, in spite of shrinking revenues and profits, said Adolfo Henriques, chairman, president and chief executive officer, in a conference call with investors Wednesday, and one day after FECI announced an acquisition agreement with a New York investment firm.
FECI, which includes the Florida East Coast Railway and a separate real estate and development arm, reported first quarter results Wednesday that included an 11 percent decrease in revenues and a 4.4 percent decline in operating profits.
FECI officials attributed the decreases to lower rail volumes from a slowing housing industry and sagging automobile sales. The railroad moves aggregate products for the construction industry and transports automobiles to Florida distribution points.
But Henriques said the overall outlook for the company is good.
'We believe our railway has a strategic position which continues to provide a strong competitive advantage and our intermodal business continues to grow,' he said.
FECI and the Fortress Investment Group said Tuesday they reached an agreement for Fortress to acquire FECI for $3.5 billion. Fortress said it was making an offer for an all-cash deal that would give FECI stockholders a total $84 a share.
The share price for FECI closed Tuesday at $84.91, leading to speculation of a bidding war for the company.
Rail stocks have also been hot since investment guru Warren Buffett disclosed in April that his company, Berkshire Hathaway, had taken a 10.9 percent stake in the Burlington Northern Santa Fe Corp., and had also invested in the Canadian National Railway, Norfolk Southern Corp., CSX Corp., and Union Pacific Corp.