CP Rail cuts forecast; chairman quits in governance dispute
By Allison Martell
TORONTO (Reuters) - Canadian Pacific Railway Ltd (CP.TO: Quote) said on Tuesday its chairman and one other director had resigned over a disagreement related to corporate governance, as the carrier trimmed its full-year earnings forecast.
Chief Operating Officer Keith Creel said Chairman Gary Colter and Krystyna Hoeg have resigned. He did not offer any detail on the disagreement. In a release, CP Rail said an existing director, Andrew Reardon, had been elected chairman.
"It was purely a matter of board governance," said Reardon on a conference call with analysts and investors. "The issues ... are clearly behind us. There are no further changes contemplated nor expected."
The railway forecast adjusted earnings per share of C$10.00 to C$10.40 for 2015. In January it said it expected adjusted earnings per share to rise more than 25 percent, indicating 2015 earnings of at least $10.63 per share.
Chief Executive Hunter Harrison, credited with dramatically improving the railway's performance since he took over in 2012, was not on the conference call.
Creel said Harrison was taking time off on doctors' orders because he had returned to work too quickly after a medical procedure, which he described as "minor maintenance procedures to his lower extremities." He said Harrison should return soon. Creel is Harrison's designated successor.
Total carloads fell 3 percent in the quarter, as U.S. grain shipments dropped 25 percent and Canadian grain fell 8 percent. The smaller crude-by-rail segment dropped 24 percent. Potash shipments rose 12 percent, and coal edged up 2 percent.
The operating ratio, a key efficiency measure, improved to 60.9 percent from 65.1 percent a year earlier, but lagged rival Canadian National Railway Co (CNR.TO: Quote), which on Monday reported an operating ratio of 56.4 percent. Continued...