CP Rail profit hit by floods, derailment
By Solarina Ho and Peter N Henderson
TORONTO (Reuters) - Canadian Pacific Railway (CP.TO: Quote) said its long-haul crude-by-rail business should pick-up later this year as price spreads for crude widen.
That crude business was a key driver in its latest record quarterly profit. However, those results, released on Wednesday, slightly missed trade forecasts as floods and a number of high-profile derailments increased costs, sending its shares lower.
"Rail is going to be a permanent part of the transportation of crude to the marketplace," said Jane O'Hagan, chief marketing officer, in a conference call with analysts on Wednesday.
The pace of crude-by-rail growth moderated in recent months as spreads between benchmark world oil prices narrowed, she added.
CP said record floods last month in the Canadian oil and gas capital of Calgary, Alberta, curbed revenue growth by C$25 million, or 2 percent. The flooding caused extensive network outages, including more than 40 track washouts over a four-day period.
The company, Canada's second-biggest railroad operator behind Canadian National Railway Co (CNR.TO: Quote), also incurred about C$35 million in train accident-related expenses, compared with a more typical C$15 million, BMO analyst Fadi Chamoun said in a note to clients.
Shares of CP fell as much as 3.9 percent to C$125.09 in Toronto. The stock is still up about 70 percent since Hunter Harrison, an industry veteran, joined the then underperforming company in June 2012 to turn it around.
CP has been plagued this year by a series of high-profile derailments and accidents involving petroleum products, raising questions of safety amid its huge efficiency campaign and job cuts. Continued...