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South Kansas City Сancels Profit Forecast Due to Uncertainty

Southern Kansas City refrains from adjusting income projections for the year because of uncertainty about the global shortage of microcircuits, teachers protesting and oil supply chain disruptions in Mexico.

In January, KCS announced that it expected double-digit revenue growth in 2021, and the operating rate of about 57.5% in 2021 and from 55% to 56% in 2022 and returns per share of 9 dollars or more in 2021 and from 10.50 to 11 dollars in 2022. The global microchip deficit has limited North American automobile production leading to a 17% fall in KCS earnings in the automotive industry compared to the same period last year to US$ 40.1 million amid a 30% fall in the number of automobile units.

But executives said that there are two other factors that have affected KCS financial performance this quarter. The first, because of teachers protest the access to the port of Lázaro Cárdenas in Mexico was blocked. The ability of KCS to service a port for more than 75 consecutive days was significantly limited. As a result, Lázaro Cárdenas intermodal transport volumes have fallen by 67% and intermodal transport revenues have fallen by 62%. The second, Mexico has changed the way it regulates the supply of petroleum products to Mexico and this change temporarily slowed rail traffic.

The results of the third-quarter 2021 final results: in the third quarter, revenue increased by 13% to $744 million compared to the same period last year through higher fuel charges, a favourable product mix and the strengthening of the Mexican peso against the United States dollar. Total wagon load decreased by 3% compared to the third quarter of 2020. Operating costs increased by almost 27% to $492.1 million, including $36.5 expense. 

Operating income fell by 7% to $251.9 million. Net profit in the third quarter was $156.1 million, or $1.71 per diluted share, which is nearly 18% lower than net profit of $189.7 million or $2.01 per diluted share, in the third quarter of 2020.