KANSAS CITY, Missouri — Rail group Kansas City Southern on Thursday posted higher quarterly profits, with better earnings from a Mexican rail stake offsetting costs from a new computer system that had disrupted the company’s domestic operations, Reuters reports.
The Kansas City, Missouri, holding group for freight-hauler Kansas City Southern Railway said third-quarter net income was $10.6 million, or 17 cents a share, and included a tax benefit. In the corresponding quarter of 2001, the company earned $9 million, or 15 cents a share.
Wall Street had expected Kansas City Southern, which also owns rail interests in Panama, to earn between 12 cents a share and 14 cents a share, with a consensus forecast of 13 cents, according to six analysts surveyed by Thomson First Call.
The company in September cautioned investors that introduction of a new computer system had created congestion in its rail system and raised overtime pay and other costs. It said third-quarter earnings forecasts, then around 18 cents a share, were too high. The computer glitches have largely ended, the company said on Thursday.
“These congestion issues had a negative impact on some revenues and certain costs during the third quarter. The struggling economy and a lower contractual rate for our major coal customer also adversely affected quarterly revenues,” said the company’s chief executive, Michael Haverty.
Quarterly revenues at Kansas City Southern, which is co-owner of Mexico’s biggest railroad, Grupo Transportacion Ferroviaria Mexicana, declined $7 million to $137.6 million. Operating income dropped $9.8 million to $6.2 million.
Kansas City Southern said coal, automotive and grain carriage revenues fell. Revenues from chemicals, petroleum products, and some forest products all rose, as did revenues from shipments transported on a mix of rail, road and sea.
The company said its equity earnings from Grupo TFM rose about $2.3 million in the last quarter from 2001’s third quarter. Earnings were also helped by a $1.7 million decline in interest expense.
Shares of Kansas City Southern declined 4 cents, or 0.28 percent, to $14.42. Other rail shares were also down, with the Dow Jones U.S. Railroads Index off 0.62 percent.