(KCS issued the following news release on October 28.)
KANSAS CITY, Mo. — Kansas City Southern today reported net income available to common shareholders for third quarter 2004 was $8.9 million, or $0.14 diluted earnings per share, compared to $1.0 million, or $0.02 diluted earnings per share, for third quarter 2003.
KCSR posted record third quarter 2004 operating revenues of $162.1 million, an increase of $17.2 million, or 11.9%, over the comparable 2003 period. Four of its five commodity groups attained quarter-over-quarter double digit revenue growth led by Paper & Forest Products, which increased 23.3% with strong gains in all its market segments. Intermodal revenues, including Norfolk Southern and CSX haulage business, increased 14.1% in third quarter 2004 compared with a year earlier. Agriculture & Minerals, led by strong gains in domestic grain, ores and minerals, and glass, stone and clay, grew 12.9%. Chemicals & Petroleum Products increased 11.7% based on strong growth in gases, plastics, petroleum, and inorganic chemicals business. Coal, the only business segment to experience a quarter-over-quarter decline, experienced a 3.7% decrease in revenues, due primarily to sharply lower deliveries to one plant served by KCSR.
KCSR third quarter 2004 total operating expenses of $137.5 million were $10.7 million higher than the same period in 2003, driven by higher fuel prices, compensation, and casualty and insurance costs.
KCSR third quarter 2004 operating income increased $6.5 million, or 35.9 % year-over-year. KCSR’s operating ratio improved to 84.8 % compared with 87.5% for the prior year period.
Third quarter 2004 equity earnings from Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V. (Grupo TFM), KCS’ Mexican affiliate railroad, increased 19% from the comparable prior year period to $1.9 million, excluding the impact of the Mexrail transaction. Grupo TFM’s third quarter 2004 revenues were $174.5 million compared to $178.2 million for the comparable 2003 period. The decline was primarily due to the impact of peso devaluation to the U.S. dollar quarter-over-quarter. KCS reports its equity in Grupo TFM under U.S. GAAP, while Grupo TFM reports under International Financial Reporting Standards (IFRS).
Year-to-Date
KCS year-to-date 2004 consolidated net income is $23.7 million, compared with $17.4 million for 2003. Net income available to common shareholders was $17.1 million or $0.27 diluted earnings per share for the first nine months of 2004 compared with $12.7 million or $0.20 diluted earnings per share year-to-date 2003. Results for 2003 included the cumulative effect of an accounting change, which increased net income by $8.9 million.
KCSR year-to-date 2004 operating revenues of $461.9 million increased $33.6 million, or 7.8%, over the comparable nine-month period in 2003. Total KCSR year-to-date 2004 expenses of $390.7 million increased $8.8 million over the same 2003 period. KCSR’s operating ratio for the first nine months of 2004 of 84.6% was an improvement of 46 basis points from 89.2% in the prior year.
Chairman, President & Chief Executive Officer Michael R. Haverty commented, “KCSR has continued to grow its carload volume and revenues throughout the first nine months of 2004, and that positive trend should continue through the remainder of the year. As KCSR continues to expand its market presence, an equal degree of effort is being placed on controlling costs while operating its rail network efficiently.
“During the third quarter there were a number of positive developments in KCS’ effort to complete the Grupo TFM acquisition process. KCS received the approval of the Mexican National Foreign Investment Commission, which combined with an extension of the previous approval by the Mexican Competition Commission, gives KCS the approval of the two Mexican regulatory bodies needed for it to become the majority owner of TFM. KCS continues to work closely with its partner, Grupo TMM, S.A. (Grupo TMM), and with Mexican government officials in its attempt to complete the acquisition process in a timely manner.”
KCS is comprised of, among others, The Kansas City Southern Railway Company (“KCSR”) and equity investments in Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V. (Grupo TFM), Southern Capital Corporation (“Southern Capital”) and Panama Canal Railway Company (“PCRC”).