Mexico teachers' protests to take toll on Kansas City Southern earnings

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Patrick Ottensmeyer, Kansas City Southern CEO
TRAINS: David Lassen
MIAMI — The teachers’ strike and related protests in Mexico — which blocked Kansas City Southern’s key route between Mexico City and the Port of Lazaro Cardenas for nearly a month — will ding the railroad’s earnings per share by 5 cents in the first quarter.

The railroad’s outlook for the rest of the year remains unchanged, however, CEO Patrick Ottensmeyer told an investor conference on Wednesday morning.

Striking teachers in the state of Michoacan, west of Mexico City, blocked railroad routes and highways beginning Jan. 14.

The KCS Acambaro District blockage was cleared on Feb. 7, opening access to the central Mexican city of Toluca. The Caltzontzin District blockage was cleared on Feb. 11, allowing KCS to resume service between Mexico City and the busy western coast Port of Lazaro Cardenas.

The blockages contributed to a 3-percent volume decline on the railroad for the year-to-date, Ottensmeyer says. That contrasts with the railroad’s expectation for 3- to 4-percent volume growth this year.

The biggest hit was to international intermodal traffic, Ottensmeyer says. The Lazaro-Mexico City route accounts for roughly a quarter of the railroad’s overall intermodal volume.

Other commodities affected include steel, automotive traffic, and heavy fuel oil shipments bound for export at Lazaro.

Overall, the protests halted 250 trains operated by Kansas City Southern de Mexico and Ferromex, affecting 3.3 million tons of freight.

Ottensmeyer spoke at the Citi 2019 Industrials Conference.

NEWSWIRETrains News Wire

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