Kansas City Southern Q2 earnings tops estimates

Railroad operator Kansas City Southern (KSU) reported 16% jump in earnings, which topped analysts forecasts, aided by the strong performance from Chemical & Petroleum and automotive divisions. However, sales increase of 4% to $682 million failed to meet Street’s estimates. Shares of the company, which dropped 1% in the pre-market trading, turned into green in the morning trading session.

Profit jumped 10% to $148.2 million compared to $134.4 million reported last year and negative growth recorded in the first quarter. Volumes saw a modest increase of 1% while the operating ratio rose modestly to 64%. Energy division, excluding crude oil, saw a double-digit dip in volumes mainly due to the closure of Texas facility in January, offset by 12% jump in Auto division.

Fuel expenses rose 8.4% due to increasing oil prices, which is expected to increase in the second half of the year also. The company expects volumes to bump up in the second half of the year due to strong macro factors coupled with ongoing capacity expansions, which would augur well for the upcoming quarters.