VANCOUVER, British Columbia, Jan 27 (Reuters) - Canadian Pacific Railway Ltd (CP.TO) said on Tuesday quarterly net profit dropped along with freight volumes, but stronger pricing and a weaker Canadian dollar helped lift profit above forecasts.
The railway, which operates in both Canada and the northern United States, said it was still too early to say when volumes that dropped off sharply at the end of 2008 would fully recover.
Some factories idled at the end of the year have returned to production, but many customers still cannot predict their shipping volumes for the rest of 2009 because of the global economic uncertainty, Chief Executive Fred Green said.
“We can give anybody a point in time where we are. Our problem is we’re not sure if we can extrapolate that number out and say that’s what you can expect, because we just do not know,” Green told analysts.
Volumes are currently running about 5 to 10 percent below last year’s levels, he said.
Canadian Pacific’s only financial guidance for 2009 has been its planned capital spending of between C$800 million to C$820 million, which it said on Tuesday was still its estimate.
The railway on Tuesday posted a net profit of C$200.6 million ($163.9 million), or C$1.29 a share, in the final three months of the 2008. That compared with C$342.3 million, or C$2.21 a share, in the same quarter a year ago.
The year-ago results had been boosted by one-time C$145 million tax gain.
Excluding items in this year’s results, the company earned C$1.15 a share in the quarter.
Revenue rose 9 percent to C$1.3 billion in the quarter, while freight revenue was up 10 percent, boosted by the impact of a weaker Canadian dollar and stronger pricing including fuel surcharges.
But the weaker Canadian dollar and higher fuel costs boosted operating expenses by 13 percent to C$833 million.
Analysts on average were expecting earnings of C$1.11 a share, before special items, on revenue of C$1.20 billion, according to Reuters Estimates.
The railway that began cutting costs late last year now has about 10 percent of its trains operating and maintenance employees on temporary layoff, although some of the wage savings did not take effect until the first quarter of 2009.
Canadian Pacific assumed full control of the Dakota, Minnesota & Eastern Railroad during the fourth quarter, and said its has found “no surprises” in efforts to integrate the DM&E into CP’s existing operations.
Canadian Pacific shares in Toronto were up C$2.75 on on Tuesday at C$40.35, having recovered slightly from the 52-week low of C$34.24 they hit in November but still far short of 52-week hight of C$75 they were at in May of 2008. ($1=1.224 Canadian Dollar) (Reporting by Bhaswati Mukhopadhyay, Allan Dowd; Editing by xxx)