(The following article by Randolph Heaster was posted on the Kansas City Star website on February 7.)
KANSAS CITY — Strong coal shipments helped Kansas City Southern post record quarterly revenues and operating income in the final three months of 2006.
For the fourth quarter ended Dec. 31, Kansas City Southern earned $35.7 million, or 41 cents a share, on $442.4 million in revenues. In the same period in 2005, the railroad earned $2.3 million, or 3 cents a share, on $388.1 million in revenues.
The earnings per share figure was the biggest quarterly profit for the company this decade.
Kansas City Southern’s fourth-quarter operating income, which is the difference between revenues and operating expenses, was $88.2 million, up 85 percent from $47.7 million in 2005’s final quarter.
The biggest jump in revenue came from coal deliveries, which were up 28.3 percent in the fourth quarter compared with the same time in 2005. That was followed closely by revenue for chemical and petroleum products, which rose 26.5 percent.
Kansas City Southern’s net income for 2006 was $89.4 million, or $1.08 a share, on $1.66 billion in revenues. That compared with 2005’s earnings of $91.4 million, or $1.10 a share, on $1.35 billion in sales.
Michael R. Haverty, Kansas City Southern’s chairman and chief executive, said the strong financial results reflected well on the changes made in key executive positions at the railroad in 2006. The changes included naming new top executives in the financial, legal, and sales and marketing departments. The railroad also promoted Art Shoener to president of the company and named Jose Zozaya as president of Kansas City Southern de Mexico.
“We’ve made real progress in the last nine months with the new management team,” Haverty said in a conference call with transportation analysts Tuesday.
Rick Paterson, a transportation analyst at UBS, said Kansas City Southern reported a sharp rise in average revenue per carload as well as volume gains in 2006.
“This drove 14 percent revenue growth year-over-year — not bad for a sleepy old railroad,” Paterson said in his report Tuesday.