The Missouri-based company said it expects 2013 to be a "bridge year" as it awaits a significant increase in volumes in 2014 from new automobile plants in Mexico.
"No one should interpret the term "bridge year" as suggesting that Kansas City Southern will be in a low-growth environment," Chief Executive David Starling said on a post-earnings conference call.
The fourth-largest public railroad operator in the United States said it expects 2013 revenue to grow at high-single digits and volumes to grow in the mid-single digits.
Overall revenue rose 7 percent to $568.4 million in the fourth quarter ended Dec. 31.
Revenue from intermodal volumes - which refers to the shipment of goods in containers that can be shifted from one form of transportation to another, such as from train to truck - rose 14 percent. Automotive revenue jumped 33 percent.
Kansas City Southern, which has a market valuation of about $9.6 billion, is generally considered to be in a better position than most railroads as it gets a boost from cross-border trade.
Other U.S. railroads have been hit by lower shipments of coal due to a warm winter and low natural gas prices.
Coal dragged down quarterly revenue at larger rivals CSX Corp and Norfolk Southern Corp, which also reported results, though increased intermodal and general merchandise shipments helped both report better-than-expected earnings.
CSX, the No. 2 publicly held U.S. railroad operator, said weaker domestic coal shipments pushed revenue down 2 percent to $2.88 billion. Norfolk Southern revenue fell 4 percent to $2.68 billion on the back of a 23 percent decline in coal revenue.
The Mexico Factor
Kansas City Southern said it is banking on four new auto factories coming up in Mexico to boost volumes. Mexico accounts for about 45 percent of Kansas City Southern's total revenue.
The factories are set to open in the first quarter of 2014 and will increase Mexican production by 25 percent to 30 percent, the company said on the call.
Kansas City Southern's net income fell to $92.5 million, or 83 cents per share, in the fourth quarter, from $96.0 million, or 87 cents per share, a year earlier.
Excluding debt-retirement and other costs, the company earned 92 cents per share. Analysts had expected earnings of 82 cents per share, according to Thomson Reuters I/B/E/S.
CSX reported net income of $443 million, or 43 cents per share for the quarter ended Dec. 28.
Excluding a gain on the sale of a non-operating property, the company earned 40 cents a share, slightly ahead of analysts' expectations of 39 cents per share.
Norfolk Southern reported net income of $413 million, or $1.30 per share for the quarter ended Dec. 31, above the market consensus of $1.19 per share. (Reuters)