UPDATE 4-CN, CP Rail profits could leave sour taste for farmers

Tue Apr 22, 2014 7:40pm EDT
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(Updates to include CN Rail's results and conference call comments)

By Solarina Ho

April 22 (Reuters) - Canada's two largest railroads reported stronger-than-expected profits on Tuesday, results that could prompt fresh criticism from farmers already unhappy with the handling of a massive crop backlog during one of the harshest winters in decades.

Canadian Pacific Railway Ltd and Canadian National Railway Co have come under enormous pressure to clear the backlog, which resulted from a record harvest last year and subsequent disruptions of service caused by a frigid winter.

The problem prompted the Canadian government to impose minimum weekly grain delivery volumes on the railways for a limited period. In addition, legislation is moving through Parliament that would give the government authority to set minimum targets for grain movement.

CP's record first-quarter profit did not sit well with Jim Wickett a Rosetown, Saskatchewan, farmer who served as chairman of the Western Canadian Wheat Growers Association. It "rubs me a little bit," he said

"Western Canada had a bumper crop and we didn't really get to reap the benefits of that," he said. Railways "only ran trains when they could gain the maximum amount of profit. And as farmers we just have to sit and take it."

CN Rail, Canada's largest railway, said net earnings rose to C$623 million ($564.44 million), or 75 Canadian cents per share, from C$555 million, or 65 Canadian cents, a year earlier. Adjusted earnings per share were 66 Canadian cents, topping the 62.5 Canadian cents expected by analysts, according to Thomson Reuters I/B/E/S.

Earlier on Tuesday, CP, the country's No. 2 operator, reported a record first-quarter profit of C$254 million, or C$1.44 a share, up from C$217 million, or C$1.24, a year earlier.   Continued...