CP Rail profit beats estimates as freight volumes rise

Thu Jan 22, 2015 10:18am EST
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(Reuters) - Canadian Pacific Railway Ltd, Canada's second-largest railroad operator, reported a higher-than-expected quarterly profit as freight volumes jumped and operating efficiency improved.

The company, however, forecast 2015 profit that could miss analysts' estimates as a 60 percent slump in oil prices could erase the cost advantage railroads have over truck operators.

CP Rail's operating ratio - or operating costs as a percentage of revenue - improved to 59.8 percent in the fourth quarter ended Dec. 31 from 92.9 percent, a year earlier.

Chief Executive Hunter Harrison, who took over in 2012, had promised to bring the ratio down to 65 percent by mid-2016.

The company said on Thursday it expected operating ratio to fall to below 62 percent in 2015 from 64.3 reported for 2014.

Net income rose to C$451 million ($365 million), or C$2.63 per share, from C$82 million, or 47 Canadian cents per share, a year earlier, when the company had taken an impairment charge of C$435 million.

Excluding items, CP Rail earned C$2.68 per share.

Revenue rose 9.5 percent to C$1.76 billion. Freight revenue per carload of grains from its U.S. business rose 29 percent.

Analysts on average had expected a profit of C$2.57 per share and revenue of C$1.74 billion, according to Thomson Reuters I/B/E/S.   Continued...