Canada Stockwatch – Canadian Pacific Railway Limited (TSE:CP, Mkt cap 38.41B, P/E 27.54, Div/yield 0.35/0.60, EPS 8.49, Shares 165.48M) has posted record first-quarter operating performance and profit, which the company attributes to its cost-control efforts over the last 12 months.
As the Wall Street Journal reports, Canada’s second-largest railroad revealed how its net income had increased to C$320 million ($262 million), or C$1.92 a share, from C$254 million, or C$1.44 a share, a year ago.
Once adjusted, the company earned C$2.26 a share, exceeding analysts’ expectations of C$2.17 a share, according to Thomson Reuters.
It also bettered analysts’ projections on revenue, which climbed by 10% to C$1.67 billion compared to a predicted figure of C$1.65 billion.
Calgary, Alberta-based CP was further boosted by news that its operating ratio – the percentage of revenue consumed by operating costs – dropped to 63.2% from 72% 12 months earlier.
There were some fears that the impact of lower prices for oil – the country’s biggest export – on the Canadian economy would send profits for the likes of CP southwards, but that doesn’t appear to have been the case.
Canadian National Railway Co., a rival of CP, also reported this week an increase in first-quarter profit as strong freight volumes and the lower Canadian dollar boosted its figures. CN saw its revenue rise 15% to C$3.1 billion.
During the first three months of the year, however, CP did note a 6% fall in crude oil-hauling revenue, but it managed to offset that with a 16% rise in grain-hauling revenue and a 29% climb for U.S. grain. Potash revenue, meanwhile, increased by 16% and fertilizers and sulfur revenue jumped 31%.
“CP’s success in the first quarter of the year is the result of hard work by its people and a business model that responds nimbly to any shift in economic conditions,” said E. Hunter Harrison, CP’s CEO. “CP’s relentless focus on rail safety and cost control has created a solid foundation for growth, innovation and creative collaboration with customers.”
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