CEO Keith Creel said “2018 was a record by almost every measure and will be remembered as a watershed year for our company.”
For the quarter, CP reported that its operating income surged 28 percent, to $874 million, on revenue of $2 billion, a 17-percent increase. The adjusted operating ratio was 56.5 percent, a 3.7-point improvement from a year ago and an all-time quarterly record. Earnings per share, adjusted for one-time items, was up 41 percent to $4.55, topping analyst estimates.
For the year, operating income was up 12 percent, to $2.8 billion, as revenue grew 12 percent, to $7.3 billion. The annual operating ratio, adjusted for one-time items, was 61.3 percent, down from 61.6 percent in 2017. Earnings per share, adjusted for one-time items, grew 27 percent, to $14.51, which also beat analyst estimates.
CP executives were upbeat about the prospects for a strong 2019 and continued profitable, sustainable growth.
The railroad expects volume growth in the mid single-digit range based on revenue ton-miles, the favorite metric of the Canadian railways, along with double-digit growth in earnings per share.
John Brooks, chief marketing officer, says CP expects another particularly strong year for Canadian grain, energy, chemicals and plastics traffic, forest products, and domestic intermodal.
CP’s key operating metrics improved in the fourth quarter, with terminal dwell down 6 percent and average train speed up 3 percent.
For the fourth quarter, volume rose 5 percent on a carload basis. For the year, CP’s carload volume rose 4 percent.
The fastest-growing commodities were energy, chemicals, and plastics – led by crude by rail shipments – along with potash and fertilizers and sulphur. All three traffic segments grew by double-digits in the quarter.
CP landed new energy-related contracts, including moving refined products from the Edmonton, Alberta, area to southern Ontario, Brooks says. CP will repurpose its closed Expressway short-haul intermodal terminal in Milton, Ontario, outside Toronto, as an energy terminal.
CP also gained a major new domestic intermodal customer, retailer Dollarama, and expects international intermodal traffic to grow through the expanded Deltaport terminal in Vancouver.
