Kansas City Southern (KSU) shares fell nearly 8% in trading Monday as the rail operator on the north-south freight corridor cut its 2015 revenue guidance citing weaker oil prices and the stronger U.S. dollar.
Recently, shares of KSU were trading below the midpoint of its 52-week trading range of $95.41 to $126.49 a share on heavy volume of 2.2 million shares. Average daily volume is 896,787 shares.
The company now expects low single-digit revenue growth, down from a mid single-digit revenue growth guidance issued in January.
“The reduced revenue guidance reflects slower year-to-date carload growth primarily from the energy sector, along with a continued deterioration in the value of the Mexican peso against the U.S. dollar and lower fuel surcharge revenues driven by lower WTI (West Texas Intermediate oil) prices,” Kansas City Southern said in a statement.
Lower carload volumes will result in 2% lower revenue compared to the previous guidance. Additionally, the combined impact of further foreign exchange rate deterioration and lower fuel surcharge revenues should reduce revenue growth by an additional 2% compared to prior guidance.
The recent decline in crude prices should result in lower-than-expected crude oil growth while lower natural gas prices will have a negative impact on the coal business, resulting in an expected 20% decline in coal revenues during Q1 2015.
Q1 revenue is approximately flat quarter to date to 2014 and foreign exchange and fuel surcharge revenues are expected to negatively impact Q1 revenues by approximately 4%. Additionally, Q1 2015 adjusted diluted earnings per share are expected to be flat to slightly higher than Q1 2014.