Energy market turmoil hits Kansas City Southern

Kansas City Southern on Friday reported a smaller fourth-quarter profit as revenue was pressured by the sharp slump in the energy market.

The railroad company said it earned $140 million in the fourth quarter, down from $142 million in the final three months of 2014. However, the results, on a per-share basis, beat analyst expectations.

Shares of Kansas City Southern closed at $67.41, up $2.87, or 4.45 percent.

The effects of declining oil prices broadsided the railroad industry in the fourth quarter. Union Pacific, Norfolk Southern, CSX and Canadian Pacific are among the companies that in recent days have reported weaker financial results and declines in energy-related shipping.

Kansas City Southern said its fourth-quarter revenue of $598 million was down 7 percent from the fourth quarter of 2014. It said overall freight shipping volume was 2 percent lower.

The railroad said revenue from rail shipments was off 11 percent in its energy market, which includes crude oil, coal and sand from fracking. Kansas City Southern also reported revenue declines in most of its other cargo categories, including automotive, agriculture and minerals, industrial and consumer products, and intermodal shipments.

Despite the challenges, CEO David Starling said he was pleased with the company’s overall fourth-quarter performance.

“Not only did the company have to contend with an unsettled economy, but also with a hurricane in Mexico and floods in a key section of its U.S. rail network,” Starling said in the earnings statement.

For the year, Kansas City Southern earned $485.3 million, compared with $504.3 million in 2014. Total revenue last year of $2.4 billion was down 6 percent from the previous year. Total freight traffic last year was down 3 percent.

This story was originally published January 22, 2016 at 10:38 AM with the headline "Energy market turmoil hits Kansas City Southern."