Kansas City Southern (KCS) has reported revenues of $605 million for the 2016 third quarter, a 4 percent decrease compared to revenues in the third quarter of 2015. When excluding estimated impacts of lower U.S. fuel prices and Mexican peso depreciation, revenue would have decreased 1 percent compared to the 2015 third quarter.
Reported net income in the third quarter of 2016 totaled $121 million, or $1.12 per diluted share, compared with $132 million, or $1.20 per diluted share, in the 2015 third quarter. Adjusted diluted earnings per share, which excluded the impacts of foreign exchange rate fluctuations, were $1.12 compared to $1.21 last year.
Overall, carload volumes, which totaled 562 thousand, decreased 4 percent compared to the 2015 third quarter. Operating income for the third quarter of 2016 was $200 million, 9 percent lower than the same quarter in 2015. Operating ratio was 66.9 percent, a 1.7 point improvement from third quarter 2015.
“Kansas City Southern faced a challenging third quarter as extraneous events, including flooding outages and service disruptions on our Mexican network, resulted in additional operating costs. In spite of these events, KCS’ third quarter carloads grew 5 percent sequentially with strength seen in both the Automotive and Energy commodity groups,” stated Patrick J. Ottensmeyer, KCS president and chief executive officer.
“Overall, the Company remains committed to growth and we continue to invest and prepare for the many long-term opportunities on the horizon,” added Ottensmeyer.
Third quarter operating expenses dropped 2 percent to $405 million. Excluding the estimated impacts of Mexican peso depreciation and lower U.S. fuel prices, operating expenses increased 2 percent compared to 2015. In the third quarter, KCS recognized a $16 million Mexican fuel excise tax credit. In the third quarter of 2016, KCS also recorded a year-to-date adjustment to increase the incentive compensation level for the year.