Industry News

CP Revenues Up 8% in 3Q

October 28, 2008 | 05:00 p.m. CDT

Canadian Pacific Railway announced third quarter net income of $173 million, down from $219 million in third quarter 2007. Diluted earnings per share was $1.11, down from $1.41 in third quarter 2007.

CP blamed the decrease on foreign exchange impacts on long-term debt in 2007 and charges associated with the revaluation of an investment in asset backed commercial paper (ABCP). Excluding those two items, diluted earnings per share was down 2 percent.

"Our pricing gains and focused cost containment helped offset declines in bulk volumes," said Fred Green, President and CEO. "Fuel expenses were a serious headwind, but we saw strong recovery in our operations with progressive improvement as we moved through the quarter. In a declining market, our operating ratio for the third quarter improved 340 basis points to 76.0 percent from second quarter 2008 of 79.4 percent."

CP freight revenues rose 8 percent in the third quarter on continued pricing strength, inclusive of fuel recoveries. Industrial and consumer products revenues were up 24 percent, with automotive and intermodal revenues increasing 16 and 11 percent respectively. Sulphur and fertilizer revenue improved 8 percent with coal improving 5 percent over 2007. Those gains were offset by a decrease in grain revenue of 4 percent due to a late harvest.

CP's operating expenses increased 11 percent in the third quarter driven by a 49 percent ($90 million) increase in fuel expense over the same quarter in 2007.

Net income for the first nine months of 2008 was $418 million compared with $604 million in 2007. Diluted earnings per share was $2.70 down from $3.87. CP said the decrease was mostly due to a large foreign exchange gain on long-term debt in the first nine months of 2007 and lower operating income in 2008.