Kansas City Southern (KCS) has reported revenues of $569 million for the 2016 second quarter, a 3 percent decrease compared to revenues in the second quarter of 2015. When excluding estimated impacts of lower U.S. fuel prices and Mexican peso depreciation, revenue increased 2 percent compared to the 2015 second quarter.
Reported net income in the second quarter of 2016 totaled $120 million, or $1.11 per diluted share, compared with $112 million, or $1.01 per diluted share, in the 2015 second quarter. Adjusted diluted earnings per share, which excluded the impacts of foreign exchange rate fluctuations, were $1.22 compared to $1.03 last year.
Overall, carload volumes, which totaled 537.3 thousand, were unchanged compared to the 2015 second quarter. Operating income for the second quarter of 2016 was $220 million, 18 percent higher than the same quarter in 2015. Operating ratio was 61.3 percent, a 6.8 point improvement from second quarter 2015.
Patrick J. Ottensmeyer, KCS' president and CEO, stated, “On balance, we were pleased with our second quarter 2016 results, particularly with the positive volume trend experienced during late May and the entire month of June.”
“KCS’ carloads were up 2 percent in June and ended unchanged with second quarter a year ago largely due to continued good performance in our Chemical & Petroleum and Agriculture & Minerals business units and a strengthening in our Automotive business late in the quarter,” added Ottensmeyer.
Second quarter operating expenses dropped 13 percent to $349 million. Excluding the estimated impacts of Mexican peso depreciation and lower U.S. fuel prices, operating expenses decreased 7 percent compared to 2015. In the second quarter, KCS recognized a $34 million Mexican fuel excise tax credit which reflected a benefit for the first half of 2016.
“Our service was affected for the second consecutive quarter by the impact of flooding in the Houston, Texas area, which resulted in a three-week shut-down of a bridge on the route KCS utilizes for its cross-border traffic. While bridge repairs were being made, KCS had to detour considerable traffic onto other carriers’ routes,” concluded Ottensmeyer. “Again, we thank our railroad partners for their cooperation, as well as commend KCS transportation personnel for their efforts in keeping our service mostly fluid in the face of significant challenges.”