Genesee & Wyoming earnings dragged down by international operations

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DARIEN, Conn. — Genesee & Wyoming’s second quarter revenue and operating income declined, dragged down by slumping international operations that more than offset improved North American results.

The shortline holding company’s operating income declined 9%, to $4.2 million, as revenue sank 4%, to $571.5 million, G&W said in a regulatory filing late Wednesday. Earnings per share increased 23%, to 90 cents.

On a same-railroad basis, G&W reported higher revenue and profits for its North American operations despite a 3.5% decline in traffic. Operating income rose 5%, to $84.3 million, as revenue increased 2.6%, to $333,934 on a same-railroad basis.

G&W’s North American operating ratio improved by a point, to 75.4%, for the quarter.

Traffic declined broadly at G&W’s 114 North American railroads amid a volume slump affecting the four U.S. Class I railroad systems.

“The decrease in traffic from existing operations included decreases of 11,206 carloads of coal and coke traffic, 4,221 carloads of metals traffic, 3,734 carloads of pulp and paper traffic, 2,307 carloads of lumber and forest products traffic and 1,683 carloads of other commodity traffic, partially offset by increases of 5,418 carloads of agricultural products traffic and 1,015 carloads of chemicals and plastics traffic,” G&W said in its regulatory filing.

On a same-railroad basis, G&W’s United Kingdom and European revenue grew 3%. G&W nearly halved its operating losses in Europe to $1.7 million from $3 million a year ago amid a restructuring effort.

Australian traffic dipped 9% and revenue sank 16%. Operating income Down Under tumbled 56% due to the impact of one-time items that included foreign currency depreciation, a drought that affected grain volumes, and contract changes.

G&W is selling its 49% stake in Australian operations to its partner. The deal coincides with Brookfield Infrastructure Partners’ $8.4-billion acquisition of G&W that was announced in July.

Both transactions are expected to close late this year, subject to regulatory approval.

G&W has suspended quarterly management earnings calls with investors and analysts.
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