Kansas City Southern
KSU,
-1.11%
said Friday it swung to a second-quarter net loss, as a result of more than $700 million in merger costs, while also reporting an adjusted profit and revenue that came up short of expectations. The railroad operator’s stock was little changed in light premarket trading. The net loss for the quarter was $378.6 million, or $4.17 a share, after net income of $109.7 million, or $1.16 a share, in the year-ago period. Excluding nonrecurring items, such as $720.8 million in merger costs, adjusted earnigns per share of $2.06 missed the FactSet consensus of $2.15. The company announced a “pro-competitive” merger with Canadian National Railway Co.
CN,
-1.22%
during the quarter. Revenue rose 37% to $749.5 million, boosted by higher volume, higher fuel surcharges and the strengthening of the Mexican peso against the U.S. dollar, but was below the FactSet consensus of $750.6 million. The company said it “fell short” of its own expectations for customer service. “Our operating team is focused on implementing structural and sustainable changes that will improve operational performance and the resiliency of our network,” said Chief Executive Patrick Ottensmeyer. The stock has rallied 31.9% year to date through Thursday, while the Dow Jones Transportation Average
DJT,
-1.39%
has advanced 17.5% and the Dow Jones Industrial Average
DJIA,
-0.86%
has gained 14.3%.