TORONTO, Nov 13 (Reuters) - Canadian Pacific Railway Ltd (CP.TO) said on Thursday it significantly lowered its outlook for capital expenditures for 2009 in response to the difficult economic climate.
Canadian Pacific, which has operations in Canada and the northern United States, said capital investment was expected to be C$800 million ($650.4 million) to C$820 million. That is down around C$200 million when compared with the combined CP and Dakota Minnesota & Eastern Railroad expected capital spend for 2008, the company said.
“Canadian Pacific plans capital investment in 2009 consistent with the current economic conditions,” Kathryn McQuade, executive vice president and chief financial officer, said in a statement.
“We are pacing our capital investments to match the needs of our customers, and this will result in a significant reduction in our 2009 capital spending when compared with previous years.”
The railway said the projected costs cover basic renewal of track infrastructure and its locomotive fleet, year one of a multiyear intermodal terminal build in Regina, Saskatchewan, and pilot technology projects linked to its “railway of the future” program.
Also included is US$100 million for upgrading the DM&E infrastructure, which is consistent with the plans it announced when it bought the line.
Canadian Pacific has been operating the South Dakota-headquartered DM&E and its Iowa, Chicago & Eastern subsidiary on a hands-off basis since it purchased them last year for $1.48 billion.
CP was allowed to take operational control after the U.S. Surface Transportation Board approved the deal last month.
The railway said its outlook assumes an average currency exchange rate of C$1.17 to the U.S. dollar, or 85 U.S. cents. ($1=$1.23 Canadian) (Reporting by John McCrank, editing by Maureen Bavdek)