(The following story appeared on The Kansas City Star website on August 1.)
KANSAS CITY, Mo. — Kansas City Southern outperformed even the high expectations of analysts, nearly doubling its profits in the second quarter.
For the three months that ended June 30, Kansas City Southern earned $50.5 million, or 56 cents a share, on $486.2 million in revenues, the company reported Thursday. That was up 87 percent on a per-share basis from its earnings of $25.3 million, or 30 cents a share, on $427.1 million in sales in the same quarter a year ago.
Analysts on average had predicted quarterly earnings of 45 cents a share for Kansas City Southern.
While most of the U.S. economy has slowed amid record fuel prices, Kansas City Southern and other railroads have flourished in recent months as a cheaper alternative to trucking and other modes of transportation. Railroads also have been able to raise rates charged to customers without losing business.
Kansas City Southern said strong pricing, sharp growth in certain sectors and increased fuel charges all contributed to the revenue growth.
“Notable is that KCS recorded volume growth despite a U.S. economy that has provided downward pressure on traffic related to building materials, appliances and automobiles,” CEO Michael R. Haverty said in a statement.
Revenues through the first half of 2008 were up 11.5 percent from last year, Haverty said, and there is no “reason to believe our revenue increases in the second half won’t be in the double digits” as well, Haverty told analysts following the earnings release.
David Starling, Kansas City Southern’s recently appointed president and chief operating officer, said a big part of the railroad’s strategy is to build up its cross-border traffic between the U.S. and Mexico and to increase business at Lazaro Cardenas, a Mexican port in the Pacific served by Kansas City Southern.
“If you look at the five-year plan, all we have to do is execute it,” he said. “It’s an exciting time and a great franchise.”
Kansas City Southern’s weeklong stock rally continued Thursday. Shares closed at $55, up $2.16. For the week, its stock price is up 14.6 percent.