Kansas City Southern Falls Most Since 2008 After Profit Miss

Jan 24, 2014 4:26 pm ET

(Updates with closing share price in fifth paragraph.)

Jan. 24 (Bloomberg) -- Kansas City Southern, the operator of U.S. and Mexico rail lines, tumbled the most in more than five years after fourth-quarter profit and sales missed analysts’ estimates as coal shipments declined.

Energy revenue slid 17 percent, chiefly because of dwindling coal loads, the Kansas City, Missouri-based company said today in a statement. Earnings of $1.03 a share on $615.6 million in sales trailed the $1.09 average of 19 estimates compiled by Bloomberg. The sales projection was $618.6 million.

“It appears that utility coal will be a headwind” in 2014, Anthony Gallo, a Wells Fargo & Co. analyst, said in a note to investors. “Our 8 percent volume growth target was dependent of robust growth in automotive, agriculture and minerals and a rebound in utility coal.”

Coal volumes at U.S. carriers have been damped by power companies switching to cheaper natural gas, eroding sales from a cargo that has been an industry mainstay.

Kansas City Southern plunged 15 percent to $99.49 at the close in New York, the steepest drop since October 2008 and the most on the Standard & Poor’s 500 Index. The results added to railroads’ mixed performance against analysts’ estimates in the past two weeks, with Union Pacific Corp. and Norfolk Southern Corp. beating those views and CSX Corp. coming up short.

Shares of all four of the carriers fell today, dragging down the S&P 500 Railroads Index by 3.5 percent and erasing its gain for the year.

--Editors: John Lear, Cecile Daurat