CALGARY, Alberta – Canadian Pacific reported double-digit growth in revenue and earnings in the third quarter, as overall volume grew 10% and intermodal and potash traffic set new records.
“Throughout the year, we have said 2022 would be a tale of two halves and that is exactly how it is unfolding,” CEO Keith Creel said on the railway’s earnings call on Wednesday. “The third quarter saw strong demand in potash and intermodal that we anticipated, and CP was well-resourced to handle the volume increases we have seen. I’m proud of the results the team delivered this quarter and excited about the opportunities in front of us.”
Quarterly operating income rose 21%, to $937 million, as revenue grew 19%, to $2.3 billion. Earnings per share increased 37%, to 96 cents.
The railway’s operating ratio improved 0.7 points, to 59.5%.
CP’s volume was up 10% based on carloads and containers, or 6% when measured by revenue ton-miles, the preferred metric of the Canadian railways. Intermodal was up 20% due to 30% growth in international traffic, while potash loads grew 28%.
The railway expects a strong finish to the year thanks to a bumper Canadian grain crop, continued strong demand across most traffic segments, and the impact of contract wins and increasing volume from new service from the Port of Saint John, New Brunswick, to Montreal, Toronto, and Chicago.
The new Inter Pipeline plastics plant in the Alberta Industrial Heartland near Edmonton, Alberta, which is solely served by CP, began shipping this quarter. CP also announced that Ford will be an anchor tenant at its new auto ramp in Bensenville, Ill., and at its reopened ramp in Edmonton, effective Jan. 1, Chief Marketing Officer John Brooks says.
CP has hired 1,300 conductors for the year to date and has the resources necessary to handle traffic growth, Creel says.
Creel says he came away from the Surface Transportation Board hearings on the CP-Kansas City Southern merger more convinced than ever that the $31 billion deal is in the public interest and will provide more rail competition. “This is an ideal merger,” he says.
He applauded the STB for extending the hearings to seven days from the planned three days, which allowed all parties to fully and fairly air their support or opposition to the merger.
The only surprises at the hearings, Creel says, were “creative lawyers” who made “overreaching and unreasonable” arguments about the merger.
CP’s average train speed fell 1% in the quarter as average train length was up 4% and average tonnage grew 3%. The railway reported a new record-low train accident rate for the quarter and notched a 12% improvement in employee injuries during the quarter.
For the quarter, CP reported that KCS volume was up 10%, revenue grew 19%, and the operating ratio improved 2.9 points to 63.2%.
Pay attention CSX, Union Pacific, Norfolk Southern and BNSF. This is how you are supposed to do things to grow your railroad. As I was already convinced that the merger should go through, this strengthens that support of the merger. Congratulations Canadian Pacific Kansas City Southern.
Now if we could just convince them to do a name change to something simpler.
I like the sound of “The Milwaukee Road” 🙂
Intermodal way, while it’s way down on the other class1’s, financially and using the intelligent aspects of PSR, and public and government relations, Creel by far leads the pack of class1’s CEO’s