Canadian Pacific's third-quarter profit beats estimates on shipments surge

FILE PHOTO: A Canadian Pacific Railway locomotive sits at the Obico Intermodal Terminal in Toronto, May 23, 2012. REUTERS/Mike Cassese

(Reuters) - Canadian Pacific Railway Ltd's CP.TO third-quarter profit beat Wall Street expectations on a surge in shipments, prompting it to raise its full-year earnings forecast, Canada's No.2 railroad operator said on Thursday.

Rail capacity in Canada has been tight as rising crude production outstrips pipeline capacity and oil companies seek alternatives for their exports.

CP Chief Executive Keith Creel said the company has room to grow, including at its Toronto and Chicago sites. “We’ve created a whole lot of capacity,” he said at the company’s investor day.

Canadian Pacific said it expects to report an adjusted profit of C$4.10 per share for the third quarter, while analysts on average were expecting C$3.64, according to Thomson Reuters I/B/E/S. Its shares were up 2.83 percent in late-morning trade.

The company also said it expects full-year adjusted profit to grow in excess of 20 percent, up from an earlier forecast for a low-double digit growth.

Canada’s crude by rail exports hit record levels above 200,000 barrels per day (bpd) in June. They are expected to rise to more than 300,000 bpd by year end and continue climbing sharply through 2019.

Canadian Pacific is also expected to benefit from a deal with Cenovus Energy Inc CVE.TO under which the oil producer would transport crude on the railroad operator's network beginning in the second quarter of 2019.

Reporting by Laharee Chatterjee in Bengaluru; Editing by Sriraj Kalluvila and Susan Thomas