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January 23, 2019 9:30 AM, EST

Despite Record Revenue, 2018 Kansas City Southern Earnings Fall Short of Expectations

Kansas City Southern Kansas City Southern trains. (Kansas City Southern)

Kansas City Southern, the smallest of the Class 1 railroads in North America, reported record fourth-quarter and full-year 2018 financial results on Jan. 18.

Fourth-quarter net revenue reached $694 million, a 5% jump from the same period in 2017 when revenue was $660 million. The company said much of the jump in revenue came from increased shipments of petroleum and other crude oil products.

Net income was $161.8 million or $1.59 per share, compared with $552.4 million or $5.35 for the same period in 2017.

For the year, Kansas City Southern generated more than $2.7 billion in revenue, compared with nearly $2.6 billion in 2017. The year’s net income was nearly $630 million, or $6.16 a share, compared with $963 million, or $9.18 a share in 2017.

Although the revenue figures both for the final quarter and the year set records, the company’s leadership expressed displeasure with the results.

“While we delivered record revenues, adjusted operating income and adjusted earnings per share, 2018 did not meet our own expectations for financial and operational performance,” CEO Patrick Ottensmeyer said in a statement. “In addition, we did not meet the expectations of our customers or shareholders, particularly in the areas of customer service and growth.”