January 29, 2008 / 12:50 PM / in 10 years

CP Rail profit lifted by tax changes

TORONTO (Reuters) - Canadian Pacific Railway (CP.TO) said on Tuesday lower future income tax rates helped double its fourth-quarter earnings, but said it expects 2008 results to slip.

CP Rail earned a profit of C$342 million, or C$2.21 per share, in the last quarter of 2007. That compares with a profit of C$146 million, or 92 Canadian cents per share, in the same quarter a year earlier.

Excluding foreign exchange gains, losses on long-term debt and other items, diluted earnings per share was up four percent to C$1.20.

The railway, which has operations in Canada and the United States, had warned in December that its earnings were taking a hit in the quarter from poor weather and high fuel costs.

"This restricted our ability to move the freight volumes we'd planned," Fred Green, the chief executive, said on Tuesday in a statement.

However changes to the railway's Canadian income tax rate resulted in a benefit of C$146 million in the quarter.

Canadian Pacific said its revenue was C$1.19 billion, unchanged from C$1.19 billion in the year-ago period. The railway's operating ratio was 74.3 percent, compared to 73.1 percent a year ago.

It expects 2008 diluted earnings in the range of C$4.70 to C$4.85 per share, down from C$6.08 in fiscal 2007. It also expects to grow total revenue by four to six percent in 2008.

($1=$1.00 Canadian)

Reporting by Jonathan Spicer; Editing by Renato Andrade

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