CALGARY, Alberta – Canadian Pacific Kansas City bucked the industry trend by posting fourth-quarter gains in volume, operating income, and revenue.
“I am proud of how our team of incredible railroaders finished this transformational year with a strong fourth quarter, allowing CPKC to deliver volume growth and best-in-class earnings growth in 2023,” CEO Keith Creel said today. “Since our historic combination in April 2023, our united CPKC team has steadily built momentum, bringing new competition to supply chains and creating more value for our customers, while remaining focused on service and safety.”
For the quarter, CPKC’s operating income was up 10%, to $1.5 billion, as revenue on the combined railroad increased 4%, to $3.8 billion. Adjusted earnings per share grew 4% to $1.18. The operating ratio improved 2.2 points to 58.7%.
Quarterly volume grew 4% when measured by revenue ton-miles, or 2% on the basis of carloads and intermodal containers.
CPKC’s key operating metrics improved for the quarter, with average train speed up 6% and average terminal dwell down 11%. The railway recorded its 17th straight year with the industry’s lowest train accident rate and a 15% improvement in the quarterly personal injury rate.
CPKC will spend $2.75 on capital projects this year, including five new passing sidings on its key north-south corridor in the U.S. The second bridge over the Rio Grande at Laredo, Texas, is 45% complete and is on schedule to open by the end of the year.
This year CPKC expects double-digit earnings growth. For the 2024-2028 period, CPKC’s outlook includes high single-digit revenue growth, double-digit earnings growth, capital spending of between $2.6 billion and $2.8 billion annually, and a return to double-digit return on invested capital.
One suspects new passing sidings on the old Milwaukee line MSP-KC.
Only Railroad to do better financially in the quarter and the only one to project any growth for the coming year. This tells me either this is the only well run railroad or the other railroads are focusing too much on next quarter earnings to run a railroad properly.
What would clearance restrictions in the tunnel have to do with passenger trains?
Nice. Still waiting on that new Detroit River tunnel.
Has anything been announced?
“It’s very difficult financially (new tunnel) because there’s so little traffic that doesn’t fit now,” he told Crain’s this month. “It’s just hard to justify the financing. Until we get to the point most of the container traffic does not fit, it’s just hard to justify a new railroad tunnel. I think it’s up in the air. The business case is very difficult.”
This was before the CPKC merger. Post merger CPKC now owns the tunnels outright. Originally CP was going to offset the cost by making the old tunnels a truck/freight express tunnel. But the new Gordie Howe bridge changed that thinking.
The original public/private effort was scrapped back in 2015. It would cost CPKC at least half a billion to build a new 2 tube tunnel today. But now with CPKC working to get Amtrak and Via through the same tunnel, I would imagine there will be a deal between them and various entities to get one built. Since the Canadian pension funds love to finance infrastructure, I wouldn’t be surprised if CPKC works on a deal where all the players pitch in.
Of the original two tubes only one is in service for rail traffic. CPKC would only need one tube that a) meets double stack clearance and b) runs a few degrees east of the current landing in Windsor to align with the CP yard lead that once went to the rail ferry dock.
Keith Creel is a great railroad CEO and it shows.
Pretty impressive and will continue to improve! Well done CPKC. Keep chugging along and outperform the market!