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Genesee & Wyoming’s North America Revenues: What Happened?

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GWR’s North America revenues

In 4Q17, Genesee & Wyoming’s (GWR) North America revenues were 56% of its total operating revenues. Its share was 62.4% in 4Q16. In 4Q17, the North America revenues were $320.2 million, a 0.6% fall from $322.2 million in 4Q16.

In 4Q17, acquisitions contributed $4 million to the total North America revenues. That implies that the same railroad revenues in North America declined on a yearly basis.

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North America carloads in 4Q17

GWR’s North America same railroad carloads declined 3.2% in 4Q17. On a reported basis, the company hauled nearly 395,500 carloads compared to ~403,000 units in 4Q16. Average revenue per car was $611 in 4Q17, a 5.9% rise from $577 in 4Q16. Coal (ARLP) volumes declined 15%, mainly due to lower shipments in the Midwest. Agricultural (ADM) shipments fell 11% due to South Dakota’s drought and stiff competition in the Midwest region.

On the other hand, demand for fractionating sand and aggregates drove the volumes of minerals and stone. Conversion of truck (JBHT) to rail pushed the volumes of paper and pulp in 4Q17. A robust West Coast finished lumber business drove lumber and forest products carloads higher. Genesee & Wyoming saw a 3.5% rise in core pricing in its North America operations, which also pushed forward the average revenue per car.

Management insights for 2018

Genesee & Wyoming expects its North America revenues to remain in the range of $1.32 billion–$1.27 billion in 2018. The company anticipates a favorable freight volume outlook for its North America operations in 2018. Capacity issues in the trucking (IYT) industry and higher diesel prices could benefit the company’s North America top-line growth in 2018.

In the next part of this series, we’ll take a look at GWR’s UK-Europe operations.

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