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Takeaways From Kansas City Southern Earnings Report

Tuesday, October 19, 2021 09:58 AM | Neal Farmer
Takeaways From Kansas City Southern Earnings Report

Shares of Kansas City Southern (KSU) are down 1% early in trading Tuesday  after the railroad surpassed revenue estimates but just missed on earnings projections.

Revenue Rising

The 13% rise in revenues from the year-ago quarter was primarily due to higher fuel surcharge, mix, and the Mexican peso strengthening against the U.S. dollar. CEO Patrick Ottensmeyer stressed that the company is well positioned for when supply chain disruptions are resolved and industrial demand remains high, saying, "Underlying industrial demand is strong, and KCS has maintained resources to prioritize customer service as volumes return to the network. As certain supply chain disruptions are resolved and our revenue environment improves, our network will be well-positioned to handle incremental volume while continuing to provide premium service to our customers.”

Merger with Canadian Pacific Railway

Meanwhile, $36.5 million of the company’s $492 million in operating expenses came from merger costs. Ottensmeyer further commented on the firm’s merger with Canadian Pacific Railway (CP),  saying, “We are also very pleased to have announced our combination with Canadian Pacific, creating the first singleline rail network linking the U.S., Mexico and Canada. This historic combination will enhance competition, create new options for customers, and support economic growth in North America."

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