RailAmerica profit off 10 percent on housing slowdown
(Reuters circulated the following article on October 31.)
CHICAGO – U.S. short-line railroad operator RailAmerica Inc. on Tuesday said quarterly net profit fell 10 percent as the slowdown in the U.S. housing market resulted in fewer lumber shipments.
The Boca Raton, Florida-based company reported third-quarter net income of $6.9 million, or 18 cents a share, down from $7.7 million, or 20 cents a share, a year earlier.
While sales rose 12 percent to $117.3 million, the company said lumber carloads fell 12 percent.
Stripping out the effects of discontinued operations, RailAmerica said it earned 18 cents a share, down from 19 cents last year. On that basis, Wall Street analysts had, on average, predicted earnings of 21 cents a share, according to Reuters Estimates.
Would a 12% drop in lumber carloadings have that large of an overall impact on net? Revenue was obviously up…considerably. I dont know that much about RA to understand their cost structure, etc.
The CFE’s traffic thru town has been pretty decent lately.
Lumber is a relatively high value commodity where rates are concerned on short lines. Other building materials are also fairly high value such as roofing, wallboard, and plywood. Also, almost all short lines move some building materials either originating or terminating shipments or even bridging in the case of some larger RA lines so only a 12% drop in lumber shipments could conceivably translate to a 10% or more impact on individual railroad revenues.
You’ve lost me. Could you clarify what you mean when you say “loose car” commodity? I guess that I don’t see why lumber should require lots of switching.
I will jump in on the defining of “loose car” and hopefully accurately address it. Lumber generally moves in single carload quantities. Thus, when you switch a lumber facility, you are generally dropping off only 1 car, perhaps 2. So, the costs for serving that industry would be higher, on a per car basis than an industry receiving multiple carloads.
I have looked at the CFE tariff and noticed they receive $900 for handling a car of lumber from Chicago to Valparaiso, distance of 50 miles. Coin!
True… This always seems to happen. A boom occurs, and then all the johnny-come-lately’s jump on the wagon at the end, thinking it will last forever… Then it dies. Home sales and rentals dropped dramatically in my area over the last 10 months or so. But that didn’t stop the building. I feel sorry for people that bought at the peak… I know people that tried to flip and are down by hundreds of thousands. I guess if being a real-estate mogul was that easy, everybody would do it. Personally, I was amazed it went as far as it did. For a time, people seemed to have lost their minds… I don’t know what would make people in some markets buy a basic three bedroom house for upwards of $1 million, but a lot of them did. Unfortunately it’s going to hurt long term growth, because now all those people are in the same boat as the millions that are up to their ears in credit card debt… which is what’s really holding things down right now.
Personally, I was amazed it went as far as it did. For a time, people seemed to have lost their minds… I don’t know what would make people in some markets buy a basic three bedroom house for upwards of $1 million, but a lot of them did. Unfortunately it’s going to hurt long term growth, because now all those people are in the same boat as the millions that are up to their ears in credit card debt… which is what’s really holding things down right now.