Canadian Pacific (TSE:CP) reports record grain shipments in October

Stockwatch - Canadian Pacific revenue Q4

Canadian Pacific (TSE:CP) reports record grain shipments in October

Canadian Pacific Railway Limited (TSE:CP, Mkt cap 28.27B, P/E 19.08, Div/yield 0.50/1.04, EPS 10.07, Shares 146.32M) reported this week that October was its best-ever month for Western Canadian grain movement to Vancouver, despite a weather-delayed harvest.

A record 15,865 carloads were transported to West Coast ports last month, overtaking the previous record of 15,449 carloads in March 2016. Total Western Canadian grain movements in the month climbed 3.9% over last year.

The company has invested millions of dollars over the past three years. This, together with new investment by its supply chain partners on grain country elevator capacity and port capacity, has already begun to fulfill the promise of greater efficiency, fluidity and velocity, CP said.

“I am proud of the CP team and applaud the efforts and early success of our supply chain partners as the crop season begins to accelerate into the colder months,” commented CP president and chief operating officer Keith Creel. “We continue to focus on providing best-in-class service to our customers and look forward to moving more Western Canadian grain to market for the benefit of farmers, shippers and the Canadian economy.”

CP also criticized what it described as “finger-pointing” at any single component of the complex supply chain.

It said that “misleading and inaccurate data published by the Ag Transport Coalition” promoted the notion that there is an adversarial relationship between the railways and Canada’s farm community.

More than three-quarters of CP’s Western Canadian grain business uses the Dedicated Train Program (DTP), which allows customers to control their own train assets for a period of 12 months or more. This means that customers use the capacity they need when they need it, the company explained.

“Trying to compare DTP performance to an ‘order fulfillment’ model, as the Ag Transport Coalition does, simply does not work,” CP concluded.

Canadian Pacific Railway Limited (TSE:CP), head-quartered in Calgary AB, operates railways in Canada and the United States and provides logistics and supply chain expertise. CP provides rail and intermodal transportation services over a network of approximately 13,700 miles, serving the principal business centers of Canada from Montreal, Quebec, to Vancouver, British Columbia (B.C.), and the United States Northeast and Midwest regions. The Company transports bulk commodities, merchandise freight and intermodal traffic. More from Reuters »

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Canadian Pacific Railway CEO adamant railway consolidation will still happen

The collapse of Canadian Pacific Railway Ltd.‘s (TSE:CP, Mkt cap 27.96B, P/E 18.48, Div/yield 0.50/1.08, EPS 9.98, Shares 153.00M) bid for Norfolk Southern Corp. has done little to deter the company’s CEO from the stance that railway consolidation must and will happen, the Financial Post reports.

Canadian Pacific Railway consolidation

Canadian Pacific Railway CEO adamant railway consolidation will still happen

Chief executive Hunter Harrison was speaking following the announcement of a better-than-expected first-quarter profit, attributed to cost controls and operating efficiencies.

Canada’s second-largest railway operator, which recently abandoned its US$27-billion pursuit of U.S.-based Norfolk Southern Corp., increased its quarterly dividend by 43% and said it plans to buy back as many as 6.9 million shares, or about 4.5% of its total outstanding.

Despite a weak freight market, CP reported a record first-quarter operating ratio — a key indicator of efficiency for railroads, where firms try to achieve as a low a number as possible — of 58.9%, down 430 basis points.

Adjusted earnings rose to $2.50 per share, beating the average analyst estimate of $2.42, while revenue fell 4% to $1.59 billion.

Harrison declared himself “extremely pleased” with the results from the quarter, before addressing CP’s failed bid for Norfolk Southern Corp.

“A lot of people were against the transaction, some of the customers that I visited with, and what they were against was not mergers, they were against how mergers were executed in the past,” Harrison said.

“I used to hate to get a spanking for something my sister did, but there’s only so much we can do.”

However, he remains adamant that consolidation will happen in the industry – but it won’t be before he retires next year.

“We just have to develop a little patience, which I’m not really endowed with, but it’ll happen one day soon,” he said.

Canadian Pacific Railway Limited, head-quartered in Calgary AB, operates railways in Canada and the United States and provides logistics and supply chain expertise. CP provides rail and intermodal transportation services over a network of approximately 13,700 miles, serving the principal business centers of Canada from Montreal, Quebec, to Vancouver, British Columbia (B.C.), and the United States Northeast and Midwest regions. The Company transports bulk commodities, merchandise freight and intermodal traffic. More from Reuters »

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Canadian Pacific abandons proposed merger with Norfolk Southern

The proposed US$30 billion merger of Canadian Pacific Railway Limited (TSE:CP, Mkt cap 29.07B, P/E 22.05, Div/yield 0.35/0.76, EPS 8.40, Shares 153.02M) with Norfolk Southern Corp. has crumbled under the pressure of opposition who have argued that the deal would diminish competition.

Stockwatch - Canadian Pacific revenue Q4

Stockwatch – Canadian Pacific abandons proposed merger with Norfolk Southern

The merger’s opposition, which includes rival railroads, shippers and U.S. politicians, made its resistance known as soon as the bid was first announced in November, the Wall Street Journal reports.

Six months later, Canadian Pacific’s board has decided to withdraw from the deal, adding that it has no plans to initiate merger talks with other competitors.

“I doubt very much we will be reaching out to anyone else. We fought the good fight; we tried to educate the public. But the political and economic environment was against us,” said Chief Executive Hunter Harrison said in an interview on Monday.

Most notable opposition included the warning from BNSF Railway Co. and Union Pacific Corp that the deal would set in motion a final round of industry consolidation, resulting in an increase in the number of major freight rails – a figure which currently stands at seven.

Meanwhile, The Federal Railroad Administrator followed up by saying she would scrutinize “significant safety hurdles” resulting from merging any of the U.S.’s major railroads.

Then last month, the U.S. Justice Department drew attention to Canadian Pacific’s plan to hold Norfolk Southern in a trust until regulators completed a lengthy review of the proposed combination.

As per rules introduced by the U.S. Surface Transportation Board in 2001, merger applicants must prove that a major deal is consistent with the public interest by enhancing competition.

Norfolk Southern is the fourth largest North American railroad by annual revenue, while Canadian Pacific is second smallest. The proposed merger would have created one of North America’s largest railroads, with annual revenues of about US$16 billion.

Canadian Pacific Railway Limited, header-quartered in Calgary AB, operates railways in Canada and the United States and provides logistics and supply chain expertise. CP provides rail and intermodal transportation services over a network of approximately 13,700 miles, serving the principal business centers of Canada from Montreal, Quebec, to Vancouver, British Columbia (B.C.), and the United States Northeast and Midwest regions. The Company transports bulk commodities, merchandise freight and intermodal traffic. More from Reuters »

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Canadian Pacific reports dip in revenue in Q4

Canadian Pacific Railway Limited (TSE:CP, Mkt cap 24.87B, P/E 19.37, Div/yield 0.35/0.86, EPS 8.39, Shares 152.95M) has reported fourth-quarter earnings that fell short of analyst estimates, while also confirming plans to cut 1,000 positions this year.

Stockwatch - Canadian Pacific revenue Q4

Stockwatch – Canadian Pacific reports dip in revenue in Q4
regarding a merger deal that would see two of North America’s largest railroad operators unite.

Adjusted earnings were 4 cents a share below analysts’ expectations. However, the carrier said its cost-saving measures will see the firm’s bottom line be in better shape come the end of 2016.

Canadian Pacific has made attempts to offset declines in cargo including crude, metals and minerals by furloughing workers and running faster trains. In addition, over the course of the next 12 months it said it will reduce its headcount by as many as 1,000 employees.

The Calgary-based company, which is attempting to acquire Norfolk Southern Corp., hopes to see per-share profit in 2016 climb by at least 10% from last year’s adjusted EPS of C$10.10.

With operating ratio, used by analysts to measure railroad efficiency, holding steady at 59.8% in the fourth quarter, it suggests that Canadian Pacific has managed to carefully balance its expenses and revenue.

Operating expenses declined 4%, driven by a 35% drop in fuel prices and a 15% dip in material costs. Bloomberg notes that this year’s ratio will improve to less than 59% from last year’s record 60%.

However, fourth-quarter earnings were C$2.72 a share, less than the C$2.76 average of 22 analyst estimates compiled by Bloomberg. That meant revenue was 4.1% lower than last year at C$1.69 billion ($1.17 billion), with analysts expecting C$1.71 billion.

Canadian Pacific can expect to benefit from the stronger U.S. dollar going forward – which accounts for more than half the company’s revenue – having seen the Canadian dollar lose about 14% of its value against its U.S. counterpart in the past year.

Canadian Pacific Railway Limited, header-quartered in Calgary AB, operates railways in Canada and the United States and provides logistics and supply chain expertise. CP provides rail and intermodal transportation services over a network of approximately 13,700 miles, serving the principal business centers of Canada from Montreal, Quebec, to Vancouver, British Columbia (B.C.), and the United States Northeast and Midwest regions. The Company transports bulk commodities, merchandise freight and intermodal traffic. More from Reuters »

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The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

 

Canada Stockwatch – Canadian Pacific Railway Reports Solid Set Of Results For Q1

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.

Canada Stockwatch Canadian Pacific Railway Reports Solid Results

Canada Stockwatch – Canadian Pacific Railway Reports Solid Set Of Results For Q1

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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The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.