Kansas City Southern Results Pressured by Weak Energy Market
January 20 2017 - 9:21AM
Dow Jones News
By Ezequiel Minaya
The long-suffering energy market battered the top line of
railway Kansas City Southern, which posted flat revenue and sagging
profit for its latest quarter, even as the wider sector shows
glimmers of a turnaround.
Petroleum revenue declined 11% during the company's fourth
quarter with the crude oil segment tumbling 67%. Sales linked to
coal, a key cargo for freight lines that has been falling in double
digits amid a commodities slump across the industry, fell a
relatively modest 9%.
Like other railroad operators, Kansas City Southern has cut
costs in an effort to ride out a long stretch of low energy prices
that have caused energy producers to reduce drilling in the
U.S.
That in turn has weighed on demand for coal used to generate
electricity, frac sand used in hydraulic fracturing and crude
oil.
Signs have begun to emerge of a possible turnaround. Earlier
this week, Union Pacific Corp. reported grain volumes jumped, the
slide in coal volume and revenue was more modest and intermodal
business was flat. And on Tuesday, CSX Corp. posted a 9.2% climb in
revenue with coal shipments rising 8.3%.
In the latest quarter, KSU's total carload volume was flat from
a year earlier.
Over all, Kansas City Southern reported a profit of $129.6
million, or $1.21 a share, down from $140 million, or $1.28 a
share, a year earlier. Adjusted profit slipped to $1.12 from $1.23
a year ago. Revenue was flat at $598.5 million.
Analysts polled by Thomson Reuters expected per-share profit of
$1.17 and revenue of $603.6 million.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
January 20, 2017 09:06 ET (14:06 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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