US rail company Kansas City Southern (KCS) posted net profits of US$22.2mn for the first quarter this year, up 72% on the US$12.9mn seen in the same quarter of 2006, the company announced in a statement.
Revenues increased 5.9% during 1Q07, totaling US$411mn, due principally to an 8.2% increase in prices, which more than compensated for a 1.3% decrease in volume over that period, the statement read.
The increase was led by a 13.3% rise in coal revenues, and 12.5% revenue growth for petroleum and chemical products, as well as an 11.6% increase in intermodal products, and an 8.6% increase in agricultural and mineral products.
The only decrease in revenue was in the automotive segment, which went down 8.5% compared to the year-ago period.
Meanwhile, Ebitda after capital expenditures increased 9.6%, to total US$108mn for the quarter.
For the rest of 2007, the company foresees revenue growth in line with the rates registered for 2005-06, and expects to gain from completion of the first phase of terminal expansions at the Lázaro Cárdenas port, in southern Mexican state Michoacán, as well as the leasing of 150 new locomotives, and strong growth from its Panama Canal Railway Company (PCRC) subsidiary, the statement read.
KCS expects Hong Kong-based port company HPH to complete the first phase of expansions to Lázaro Cárdenas by September this year, company CEO Mike Haverty said in a conference call.
Construction at the port terminal will add 600,000 TEUs of capacity there, in addition to the 200,000 TEUs of existing capacity, said Haverty.
Besides expansions at the port terminal at Lázaro Cárdenas, Mexican subsidiary KCSM is currently working on the construction of a 110ha multimodal terminal there. The US$80mn first phase of construction is set to kick off in January 2008 and wrap up within a year, BNamericas reported previously.
Upon its completion, the multimodal terminal will have a capacity to handle 1M TEUs per year, previous reports indicated.
The company also plans to proceed in Q2 with refinancing of 12.5% notes issued by KCSM, bringing the company pre-tax interest savings of some US$7.5mn, the statement read.
"Those become positive on June 15, and the economics are very positive for us to go ahead and call those bonds and replace them, and we believe that market conditions are favorable as indicated by the transaction we placed in December of last year," CFO Pat Ottensmeyer said in the conference call.
Previously, the company successfully refinanced US$175mn of notes held at 10.25% interest by KCSM, with notes at 7.625% interest, according to prior reports.
KCS is also looking into refinancing its holding in PCRC, the statement read.
This transaction would give KCS about US$35mn in cash, Ottensmeyer said in the statement.
Net income at PCRC rose 31% for the quarter, while container volumes rose 25%, and freight revenues went up 16%, enabling the company to carry out its plans to refinance the subsidiary, said Haverty.
Based in Kansas City, Missouri, KCS is a transportation holding company with railroad investments in the US, Mexico and Panama. Its international holdings include KCSM and a 50% interest in PCRC.
KCSM serves northeastern and central Mexico and the port cities of Lázaro Cárdenas, Tampico and Veracruz, while PCRC provides ocean-to-ocean freight and passenger services along the Panama Canal.
By Michael Ford
Revenues increased 5.9% during 1Q07, totaling US$411mn, due principally to an 8.2% increase in prices, which more than compensated for a 1.3% decrease in volume over that period, the statement read.
The increase was led by a 13.3% rise in coal revenues, and 12.5% revenue growth for petroleum and chemical products, as well as an 11.6% increase in intermodal products, and an 8.6% increase in agricultural and mineral products.
The only decrease in revenue was in the automotive segment, which went down 8.5% compared to the year-ago period.
Meanwhile, Ebitda after capital expenditures increased 9.6%, to total US$108mn for the quarter.
For the rest of 2007, the company foresees revenue growth in line with the rates registered for 2005-06, and expects to gain from completion of the first phase of terminal expansions at the Lázaro Cárdenas port, in southern Mexican state Michoacán, as well as the leasing of 150 new locomotives, and strong growth from its Panama Canal Railway Company (PCRC) subsidiary, the statement read.
KCS expects Hong Kong-based port company HPH to complete the first phase of expansions to Lázaro Cárdenas by September this year, company CEO Mike Haverty said in a conference call.
Construction at the port terminal will add 600,000 TEUs of capacity there, in addition to the 200,000 TEUs of existing capacity, said Haverty.
Besides expansions at the port terminal at Lázaro Cárdenas, Mexican subsidiary KCSM is currently working on the construction of a 110ha multimodal terminal there. The US$80mn first phase of construction is set to kick off in January 2008 and wrap up within a year, BNamericas reported previously.
Upon its completion, the multimodal terminal will have a capacity to handle 1M TEUs per year, previous reports indicated.
The company also plans to proceed in Q2 with refinancing of 12.5% notes issued by KCSM, bringing the company pre-tax interest savings of some US$7.5mn, the statement read.
"Those become positive on June 15, and the economics are very positive for us to go ahead and call those bonds and replace them, and we believe that market conditions are favorable as indicated by the transaction we placed in December of last year," CFO Pat Ottensmeyer said in the conference call.
Previously, the company successfully refinanced US$175mn of notes held at 10.25% interest by KCSM, with notes at 7.625% interest, according to prior reports.
KCS is also looking into refinancing its holding in PCRC, the statement read.
This transaction would give KCS about US$35mn in cash, Ottensmeyer said in the statement.
Net income at PCRC rose 31% for the quarter, while container volumes rose 25%, and freight revenues went up 16%, enabling the company to carry out its plans to refinance the subsidiary, said Haverty.
Based in Kansas City, Missouri, KCS is a transportation holding company with railroad investments in the US, Mexico and Panama. Its international holdings include KCSM and a 50% interest in PCRC.
KCSM serves northeastern and central Mexico and the port cities of Lázaro Cárdenas, Tampico and Veracruz, while PCRC provides ocean-to-ocean freight and passenger services along the Panama Canal.
By Michael Ford