CALGARY, Alberta – Canadian Pacific reported record third-quarter financial results on Wednesday, as traffic was up slightly and the railway set records for key operating metrics.
CP maintained its financial outlook for the year despite lowering its volume expectations. CP now expects low single-digit growth in revenue ton-miles, down from the previous expectation of mid single-digit growth.
Several factors were behind the revised volume outlook. The Canadian grain harvest has been delayed due to wet weather. Potash producers have experienced delays in inking new contracts with China and India. There’s no real fall peak for intermodal traffic this year. And crude oil traffic has yet to ramp up as Alberta aims to privatize the contracts it signed with CP and Canadian National earlier this year.
CP executives remain optimistic about traffic growth, however, as grain and potash shipments are expected to be delayed, not lost, and more crude should begin moving soon.
For the quarter, CP’s traffic grew 1% on a carload basis but declined 1% when measured by revenue ton-miles, the favorite metric of the Canadian railways.
“We’re very optimistic, we see positive RTM growth, and obviously, revenue growth and strength and ability to drive industry-leading earnings again in 2020,” CEO Keith Creel told investors and analysts on the railway’s earnings call.
CP’s operating income grew 10%, to $869 million, as revenue rose 4%, to a record $1.97 billion. Earnings per share, adjusted for the impact of one-time items, increased 12% to $4.61, which topped analyst expectations.
CP’s operating ratio improved 2.2 points to 56.1%, a record that led the industry in the quarter.
Key operating metrics all improved for the quarter as trip plan compliance stood at 90%, Creel says.
Average terminal dwell improved 16%, average train speed increased 5%, and car miles per day improved 15%.
CP also saw a 30% improvement in its Federal Railroad Administration train accident rate and a 5% decline in its personal injury rate.
