(Reuters) - Canadian Pacific Railway Ltd (CP.TO) (CP.N) reported lower-than-expected quarterly results on Wednesday and cut its full-year earnings forecast, due mainly to a delayed grain harvest and lower crude oil volumes.
The company said it now expects 2016 profit to grow in the mid-single digits, compared to the double-digit growth it had expected in June.
“Effectively the story is the grain story,” CP Chief Executive Hunter Harrison told a call with analysts. “If the grain had been like a lot of folks were predicting I think we would have been right in line with what we expected.”
Harrison said if the Canadian grain harvest, delayed by weather, doesn’t move in the fourth quarter it will carry over into the first quarter of 2017.
Revenue fell more than 9 percent to C$1.55 billion ($1.18 billion), missing analysts’ estimates of C$1.61 billion, according to Thomson Reuters I/B/E/S.
However, a 6.2 percent fall in costs helped the company post a higher quarterly profit. Canada’s second-largest railway reported an operating ratio, a key metric, of 57.7 percent for the third quarter which should improve into the mid 50s by year’s end, Chief Financial Officer Nadeem Velani told analysts.
The lower the ratio, which measures operating costs as a percentage of revenue, the more efficient the railroad.
Asked whether CP’s board would consider again raising its dividend, which it increased by 43 percent in April, Harrison said he would be open to a future hike.
“My personal view was that we were maybe a little light on dividend mix, maybe the dividend will increase a little bit, as opposed to we’ve been stronger in the past on buybacks,” he said.
The company said its profit rose to C$347 million, or C$2.34 per share in the third quarter ended Sept. 30, from C$323 million, or C$2.04 per share, a year earlier.
Excluding items, the company earned C$2.73 per share, below estimates of C$2.79.
Canadian Pacific stock slipped 0.68 percent to C$199.94 in early afternoon Toronto trading.
Reporting by John Benny in Bengaluru; Editing by Shounak Dasgupta and Meredith Mazzilli