(The Associated Press circulated the following article on January 31.)
KANSAS CITY — Freight railroad operator Kansas City Southern said Monday that it posted a fourth-quarter profit as shipments of paper and other wood products surged.
Quarterly earnings swung to a $700,000 profit from a year-ago loss of $5.2 million. After the payment of preferred stock dividends, the company posted a loss of $1.4 million, or 2 cents per common share, narrower than a loss of $6.4 million, or 10 cents a share, during the same period last year. Earnings for the latest period reflect a charge of $8.8 million, or 14 cents a share, related to deferred tax deductions at the company’s Mexican subsidiary, Group TFM. Excluding the charge, earnings were 12 cents a share. Analysts surveyed by Thomson First Call expected earnings of 16 cents per share.
Revenue rose 18 percent to $174.6 million from $148.5 million, driven by 33 percent growth in paper and forest products, along with military shipments. The company said its intermodal and automotive business also posted strong growth of 19 percent.
For the year, Kansas City Southern’s profit doubled to $24.4 million, or 25 cents per share, from $12.2 million, or 10 cents per share. Revenue increased 10 percent to $639.5 million from $581.3 million. Analysts were looking for earnings of 43 cents per share.
The company said Grupo TFM reported slightly lower sales of $173.5 million in 2004 than in 2003, due to locomotive fuel expense.
The company also said new tax legislation in Mexico will substantially reduce its tax rate in that country over the next few years. During the fourth quarter, the Mexican government passed legislation that will lower the company’s tax rate in that country – which was 33 percent in 2004 – to 30 percent in 2005, 29 percent in 2006 and 28 percent in 2007. Kansas City Southern said the lower rate will also reduce the carrying value of deferred tax deductions for Grupo TFM.
Shares rose 2 cents to $16.95 in morning trading on the New York Stock Exchange.