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Kansas City Southern's First-Quarter Net Profit Jumps 16 Percent

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Kansas City Southern (NYSE: KSU) said its first quarter 2019 net profits rose nearly 16 percent amid its ongoing transition to precision scheduled railroading (PSR).

Adjusted net income for the first quarter of 2019 totaled $154.9 million, or $1.54 per share, compared with $133.8 million, or $1.30 per share, for the first quarter of 2018.

Record first quarter revenue of $675 million boosted profits, even though overall carloads declined by 1 percent over service interruptions at Lázaro Cárdenas, Mexico because of teacher protests, KSU said. First quarter revenue rose 6 percent from the $639 million in the first quarter of 2018.

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First quarter revenue growth was due to increased volumes in chemical and petroleum, agricultural and minerals, and energy and industrial and consumer products, KSU said.

KSU's adjusted operating ratio was 64.2 percent in the first quarter of this year, compared with 65.8 percent for the same period a year ago.

The reduced operating ratio comes as KSU transitions to PSR, an operating tool that can lower company expenses as it seeks to maximize a company's assets. Using PSR, railroads schedule railcars on a fixed schedule rather than on an on-demand basis.

KCS adopted PSR in January, following other Class I railroads that have deployed in recent years, including CSX (NYSE: CSX), Norfolk Southern (NYSE: NSC) and Union Pacific (NYSE: UNP).

"Although we are still in the early stages of implementation, KCS' transition to a precision-scheduled network is already producing improved velocity and dwell, which is driving improved customer service, labor and asset utilization as well as other efficiencies," said KSU president and chief executive officer. Patrick J. Ottensmeyer.

Image sourced from Pixabay

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