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Canadian Pacific profit misses estimates on lower freight volumes

(Reuters) - Canadian Pacific Railway Ltd CP.TO missed Street estimates for quarterly profit on Tuesday, as the railroad operator was hurt by lower freight volumes during the COVID-19 pandemic.

The company’s operating ratio, a measure of operating expenses as a percentage of revenue and a key metric for Wall Street, rose to 58.2% from 56.1% a year earlier. A lower operating ratio signals improved profitability.

Canadian Pacific, however, said it expects at least mid-single-digit adjusted earnings growth in 2020.

The pandemic compounded woes for rail operators, which moved record amounts of Canadian oil at the start of this year but witnessed a plunge in crude volumes later due to production cuts by energy companies.

Canadian Pacific’s energy, chemicals and plastic shipments dropped 30% during the third quarter.

Its total carloads, the amount of freight loaded into cars during a specified period, fell 7%.

Net income fell 3.2% to C$598 million ($453.48 million), or C$4.41 per share, in the three months ended Sept. 30. Revenue declined by about 6% to C$1.86 billion.

On an adjusted basis, Canadian Pacific earned C$4.12 per share, missing an average Street estimate of C$4.23, according to Refinitiv data.

Reporting by Sanjana Shivdas in Bengaluru; Editing by Ramakrishnan M.

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