Kansas City Southern beats expectations, stock dips on Mexico uncertainty

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UPDATE 2-Kansas City Southern beats expectations, stock dips on Mexico uncertainty

(Adds CEO quote, analyst quote, background on antitrust probe)
    April 21 (Reuters) - Regional U.S. railroad Kansas City
Southern <KSU.N> beat expectations for first-quarter earnings,
reporting a 36 percent jump in quarterly profit driven by an
increase in overall carload volumes, including a significant
rise in energy revenue.
    "The long-term outlook continues to be extremely positive,"
chief executive Patrick Ottensmeyer said in a call with
analysts. "The way I look at this quarter is solid and clean."
    Nevertheless, shares slipped on Friday on worries about the
company's operations in Mexico.
    "These were solid results," said Justin Long, a research
analyst with Stephens.
    But he said "continued uncertainty" about President Donald
Trump's promise to renegotiate the North American Free Trade
Agreement and a Mexican antitrust investigation are weighing on
the stock.
    The railroad has an extensive network in Mexico.
    Shares were down 1.18 percent at $89.50.
    The company in the first quarter also posted an operating
ratio - a measure of operating costs as a percentage of revenue
- of 65.4 percent, a 1.2 point improvement over the year ago
    Still, Ottensmeyer said on the call that the company is "not
declaring victory" on its operating ratio.
    The lower the operating ratio, the more efficiently the
railroad is running.
    The company is facing a probe by Mexico's antitrust
watchdog, which said in March that a lack of competition in
Mexico's rail freight sector has resulted in high customer
prices. [nL2N1GS1NF]
    The railroad on Thursday said it filed a challenge to that
preliminary report. Ottensmeyer on Friday's analyst call
declined to go into further details. [nFWN1HS0UK]
    Kansas City Southern's net income available to common
stockholders rose to $146.5 million, or $1.38 per share, in the
first quarter ended March 31, from $107.7 million, or 99 cents
per share, a year earlier. [nBwM10Rga]
    The company posted adjusted earnings per share of $1.17.
    Total revenue increased 8.3 percent to $609.5 million.
    Excluding the impact of Mexican peso depreciation, revenue
increased 11 percent, said the company.
    Revenue in the company's chemical & petroleum business rose
8 percent, while energy revenue soared 64 percent.

 (Reporting by Rachit Vats in Bengaluru and Luciana Lopez in New
York; Editing by Phil Berlowitz)
 ((luciana.f.lopez@thomsonreuters.com; +1 646 223 6319; Reuters
Messaging:  luciana.f.lopez.thomsonreuters.com@reuters.net))


This article appears in: Fundamental Analysis , Stocks , Technology , Earnings
Referenced Symbols: KSU

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