GATX Corporation’s (GMT) fourth quarter earnings of 35 cents per share were a couple of pennies below the Zacks Consensus Estimate of 37 cents. A year ago, the company had reported a profit of 58 cents. GATX, which provides transportation assets to rail companies, witnessed a drain in earnings due to a weak rail market coupled with low freight rates.
Total revenues declined 6.5% due to lower business at American Steamship, where revenues dropped 20% to $54 million due to a steep decline in iron ore demand for steel manufacturing (total tonnage off 40% for full-year 2009). Pre-tax earnings decreased 47% year-over-year to $21.5 million.
Cost reduction efforts undertaken by GATX have led to a 7.0% decline in costs and expenses to $153.8 million from $165.6 million in the year-ago period.
The weakened economy has led to a fall in fleet utilization to 95.9% at Dec 31, 2009, from 97.9% last year.
Segment Results
Rail segment profit was $33.9 million, compared to $58.4 million last year. The decline was the result of market pressures that negatively affected utilization, lease rates, scrap income and remarketing income.
Specialty reported a segment profit of $8.1 million, compared to $13.5 million in the prior-year period. Lower remarketing income and substantially lower share of affiliates’ earnings from the marine joint ventures contributed to the decline in segment profit year-over-year.
American Steamship Company reported a segment profit of $6.0 million, compared to $6.4 million in the prior-year period. The profit decline was mainly brought on by a reduction in tonnage carried due to a fall in iron ore demand.
2009 Outlook
Management expects earnings for 2010 to report in the range of $1.50–$1.70 per share. In the near term, we expect results to reflect the effects from economic slowing, including pressure on lease rates, utilization, and lower scrap and remarketing income.
Read the full analyst report on “GMT”
Zacks Investment Research
