CALGARY, Alberta — Canadian Pacific posted higher quarterly revenue and operating income despite a decline in volume that was largely driven by the small Canadian grain crop.
Operating income rose 6%, to $868 million, as revenue rose 7%, to $2.1 billion, CP announced on Thursday morning. Earnings per share, adjusted for the impact of one-time items, declined 8%, to 95 cents, due to the impact of items related to the proposed Kansas City Southern merger.
CP’s operating ratio rose a half point, to 60.6%, as fuel prices shot up 70% in the quarter. Adjusted for the impact of one-time items, the operating ratio was 59.7%.
Volume was down 1% when measured by carloads, or down 2% on a revenue ton-mile basis, the preferred metric of the Canadian railways. Grain – CP’s largest carload commodity – was down 29%, largely due to a Canadian crop that was 40% below average. Intermodal volume set another quarterly record as both international and domestic traffic grew.
CP executives said they expect double-digit-percentage volume growth through the end of the year due to strong demand, including record U.S. grain volume, an average Canadian grain crop, growth in frac sand due to increased oil drilling, new refined products and plastics facilities coming online, and strong demand for intermodal and automotive shipments.
CP’s average terminal dwell improved 12% compared to a year ago, while average train speed was flat as train length and weight were up 2%.
Kansas City Southern’s second quarter results also improved. Revenue was up 13% as volume grew 3%. The railway’s operating metrics improved, with average train speed up 12% and terminal dwell down 16%.
Note the word “GROWTH”; seems to be a common trait among Canadian Roads, but a foreign concept here for our four “biggies”. Seems like SHRINK works best here for the hedge funds and exec bonuses.