Monday, January 23, 2012

Kansas City Southern reports 15.6% increase in 2011 revenue

Kansas City Southern reported Q4 2011 revenue of $530.3m, an almost 11% increase over Q4 2010. For 2011, the railroad reported 15.6% increase in revenue, $2.1bn. The smallest of the US Class I railroads, Kansas City Southern has pursued a somewhat different strategy then the other railroads. Almost half of its revenue is derived from Mexico where it is the only US railroad with access to the Port of Lazaro Cardenas. The company has invested heavily in its Mexican operations and it appears it has paid off for them.

For Q4 2011, the two segments to report the largest revenue gains were intermodal and automotive.Intermodal revenue increased 29% whereas automotive increased 30%. The increase in Mexican automotive manufacturing throughout 2011 was a positive for the company as was intermodal services. For the year, revenue from the automotive group increased 42% and intermodal increased 30%.

Chemical and petroleum groups reported declines because of inventory restocking, a maintenance outage at a refinery and a customer splitting shipments between Kansas City Southern and another company.

Still, as long as demand for Mexican output remains strong, the company will continue to report strong earnings. 2012 outlook remains positive as more automotive and other manufacturing continues to expand and move into the Mexican market.