(The following story by John D. Boyd appeared on The Journal of Commerce website on February 18, 2010.)
WASHINGTON, D.C. — Rail equipment supplier FreightCar America posted a $5.6 million fourth quarter loss as it said sales of railroad cars fell “significantly” – by 82 percent to $49.4 million.
North American rail equipment demand has been savaged by the severe recession and a huge overhang of idled units that experts say will take years to work off. FCA ended 2009 with an order backlog of just 265 railcars to build, down from 2,424 at the end of 2008 and 777 when the 2009 third quarter ended.
However, the company said it has already booked orders so far this year for more than 3,000 additional cars for delivery “over the course of 2010 and 2011,” plus an order for 500 used cars out of its inventory.
Ed Whalen, FCA’s president and CEO, said the last half of 2009 was marked by “an absence of any meaningful order activity.” He also said “we do not expect market conditions to materially improve in 2010,” but new orders it has received “will provide an excellent base of business for us over the course of the year, allowing us to take on additional volume very efficiently.”
The company has continued to cut costs and tend to its balance sheet. FCA had cash and marketable securities totaling $129 million at the end of December, equal with a year earlier and down from $134 million as September ended.
The quarter’s net income included a small loss on a non-controlling share of a joint venture firm in India, but its loss otherwise was still $5.548 million.
For the whole year, the company’s total profit fell 58 percent to $4.8 million, as revenue shrank 67 percent to $248 million. Whalen said activity early in 2009 had been relatively strong as FCA worked down its backlog and picked up additional orders.
FCA’s focus has been on coal cars to handle the single-largest rail-hauled commodity, but coal traffic nationwide fell about 10 percent last year. It also builds other railcars from intermodal wells and flatcars to those that carry automobiles and steel coils.