(The following article by Randolph Heaster was posted on the Kansas City Star website on November 3.)
KANSAS CITY, Mo. — A settlement of a longstanding dispute with the Mexican government created a big one-time gain for Kansas City Southern in the third quarter.
For the three months ended Sept. 30, Kansas City Southern earned $110.5 million, or $1.14 a share, on $384.6 million in revenues.
Kansas City Southern’s results for the first time include all the operations of TFM, Mexico’s biggest railroad. Kansas City Southern took majority ownership of TFM this year when it bought out its Mexican partner, Grupo TMM. In September, Kansas City settled a tax-refund dispute with the Mexican government that gave the railroad full ownership of TFM.
During the same period last year, Kansas City Southern’s net income was $8.9 million, or 14 cents a share, on $163.2 million in revenues.
This year’s third quarter was negatively affected by hurricanes. Hurricane Emily in July reduced operating income on the company’s Mexican operations by $1.8 million. Hurricanes Katrina and Rita in September reduced operating income at U.S. and Mexican operations by a combined $10.2 million.
However, the settlement with Mexico provided a one-time, noncash gain of $134.7 million.
For the first nine months of the year, Kansas City Southern earned $89.1 million, or $1.04 a share, on $963.9 million in revenues. During the same period last year, the company earned $17.1 million, or 27 cents a share, on $464.9 million in sales.