CP Rail Earnings Beat Expectations on Declining Costs
Canadian Pacific Railway reported third-quarter profit that topped analysts’ estimates, buoyed by a weaker currency and expense reductions that included parking locomotives.
Earnings excluding some items were C$2.69 a share, Canadian Pacific said in a statement Oct. 20. That beat the C$2.68 average estimate of 26 estimates compiled by Bloomberg News. Revenue advanced 2.3% to C$1.71 billion ($1.31 billion), beating the C$1.68 billion average estimate.
Like its major peers across North America, Canadian Pacific has been pinched by dwindling cargo volumes this year. The global rout in crude prices has sapped demand for oil-by-rail shipments and for the sand used in hydraulic fracturing.
The results capped a quarter in which CEO Hunter Harrison was sidelined while recovering from leg surgery, leaving his designated successor, Chief Operating Officer Keith Creel, in charge of Canada’s second-largest railroad.
Harrison, 70, who helped boost the railroad’s operating ratio to one of the best in North America from one of the worst, said the plan for him to remain CEO until the middle of 2017 is intact.
“I’m back on my feet,” Harrison said on an earnings conference call Oct. 20 with analysts. “Most of all the medical issues of any significance are behind me.”
Harrison was hired in 2012 after Pershing Square Capital Management became the carrier’s largest shareholder and pushed to oust CEO Fred Green. Canadian Pacific had long been North America’s least-efficient carrier.
Canadian Pacific reported a third-quarter operating ratio, a measure of efficiency in which a lower number is better, of 59.9% as the railroad cut costs amid falling shipments. That ratio was more than 80% when Harrison took over.
Harrison underwent surgery to have stents implanted in his legs. Even while the CEO recovered at home in Connecticut, he remained “actively engaged” in the company’s business, spokesman Marty Cej said last month. Canadian Pacific disclosed Harrison’s health issues on its July 21 earnings conference call.
