Kansas City Southern (KCS) reported second quarter results on July 19. Revenues were $569 million, a decrease of 3% from second quarter 2015. Overall, carload volumes were unchanged compared to second quarter 2015. Excluding the estimated impacts of Mexican peso depreciation and lower U.S. fuel prices, revenue increased 2% compared to the second quarter of 2015.
Operating expenses in the second quarter were $349 million, 13% lower than 2015. Excluding the estimated impacts of Mexican peso depreciation and lower U.S. fuel prices, operating expenses decreased 7% compared to the second quarter of 2015. In the second quarter of 2016, the Company recognized a $34 million Mexican fuel excise tax credit, reflecting a benefit for the first half of 2016.
Operating income for the second quarter of 2016 was $220 million, an increase of 18% from the second quarter 2015. KCS reported a second quarter operating ratio of 61.3%, a 6.8 point improvement from second quarter 2015. Reported net income in the second quarter of 2016 totaled $120 million, or $1.11 per diluted share, compared with $112 million, or $1.01 per diluted share, in the second quarter of 2015. Excluding the impacts of foreign exchange rate fluctuations, adjusted diluted earnings per share for second quarter 2016 was $1.22, compared to $1.03 in second quarter 2015.
“On balance, we were pleased with our second quarter 2016 results, particularly with the positive volume trend experienced during late May and the entire month of June,” stated Kansas City Southern’s President and Chief Executive Patrick J. Ottensmeyer. “KCS’ carloads were up 2% in June and ended unchanged with second quarter a year ago largely due to continued good performance in our Chemical & Petroleum and Agriculture & Minerals business units and a strengthening in our Automotive business late in the quarter.
“Our service was affected for the second consecutive quarter by the impact of flooding in the Houston, Texas area, which resulted in a three-week shut-down of a bridge on the route KCS utilizes for its cross-border traffic. While bridge repairs were being made, KCS had to detour considerable traffic onto other carriers’ routes. Again, we thank our railroad partners for their cooperation, as well as commend KCS transportation personnel for their efforts in keeping our service mostly fluid in the face of significant challenges.”
Second Quarter 2016 Results:
Revenue of $569 million, a decrease of 3% from second quarter 2015.
Carload volumes of 537.3 thousand, unchanged from prior year.
Operating income of $220 million, an increase of 18% from second quarter 2015.
Operating ratio of 61.3%, compared with 68.1% in second quarter 2015.
Diluted earnings per share of $1.11, an increase of 10% compared to second quarter 2015. Adjusted diluted earnings per share of $1.22, an increase of 18% compared to second quarter 2015.