CP Rail's record profit tops forecast; shares hit record
By Solarina Ho
(Reuters) - Canadian Pacific Railway's (CP.TO: Quote) third-quarter profit rose more than expected as freight revenue hit a record high and operating costs fell, lifting the stock of Canada's No. 2 rail operator more than 10 percent to a historic peak.
Industrial and consumer products, including crude oil, were among the biggest contributors to freight revenue growth in the quarter. Revenue per ton miles in that category rose 11 percent due to growth in volumes of long-haul crude oil and sand for the fracking industry, CP said on Wednesday.
Energy shipments have been making increasingly large contributions to rail companies' profits as producers search for alternatives to crowded pipelines to get oil to markets. Rival CN Rail (CNR.TO: Quote) also highlighted energy sector growth when it reported quarterly results on Tuesday.
The results sent CP's stock soaring 10.6 percent, or C$14.32, to C$149.06 on the Toronto Stock Exchange at mid-afternoon, and the shares at one point hit a record C$149.47.
Shares of CN, which reported record revenue after markets closed on Tuesday, rose 5.9 percent to a record C$116.20.
CP said it moved 65,000 carloads of crude so far this year and was expecting to hit 85,000 to 90,000 this year. It is still on track to meet the longer-term guidance of 140,000 to 210,000.
The railroad said it is expecting more heavy crude shipments than the lighter Bakken crudes that it currently moves. Frac sand volume grew by double digits.
The company saw some moderation of orders during the quarter due to tight spreads between benchmark world oil prices. Continued...