Canada’s two largest rail­ways re­port job cuts

The Guardian (Charlottetown) - - CANADA - BY IAN BICKIS THE CANA­DIAN PRESS

Canada's two largest rail­ways are re­port­ing job cuts of up to 900 peo­ple as fall­ing ship­ments of oil, grain and coal take a toll on their in­dus­try.

Cana­dian Pa­cific Rail­way Ltd. (TSX:CP) said Tues­day it plans to slash 200 to 300 jobs later this year as the sec­tor faces lower than ex­pected freight vol­umes.

“If busi­ness goes down and de­mand re­duces, then ob­vi­ously head count is go­ing to go down in lock­step with it,” pres­i­dent and chief op­er­at­ing of­fi­cer Keith Creel told in­vestors in a con­fer­ence call.

CP's planned job cuts come a day af­ter Cana­dian Na­tional Rail­way (TSX:CNR) an­nounced it had cut 600 jobs so far this year and has im­ple­mented a hir­ing freeze.

CN, which had about 25,000 em­ploy­ees at the end of last month, says it ex­pects to re­call many of those laid off by the mid­dle of next year.

CP's latest cuts would be on top of the roughly 700 jobs it has elim­i­nated in the past year, leav­ing the com­pany with 14,100 em­ploy­ees.

The job losses were an­nounced as the rail­way re­ported sec­ond-quar­ter re­sults that saw its rev­enue tick lower to $1.65 bil­lion com­pared with $1.68 bil­lion in the same pe­riod last year.

CEO Hunter Har­ri­son didn't par­tic­i­pate in Tues­day's con­fer­ence call with in­vestors be­cause he was re­cov­er­ing from a med­i­cal pro­ce­dure, but in a state­ment he said CP is ef­fi­cient and can re­spond to an evolv­ing econ­omy.

“Even in the face of this eco­nomic slow­down, CP's com­mit­ment to pro­vid­ing the best ser­vice at the low­est cost will con­tinue to serve us well mov­ing for­ward,” Har­ri­son said.

In its out­look, CP said it ex­pects to see two to three per cent rev­enue growth this year, down from April ex­pec­ta­tions of seven to eight per cent. It also re­vised its an­nual ad­justed di­luted earn­ings per share to to­tal $10 to $10.40, down from an ex­pected $10.63 or more at the end of the last quar­ter.

The rail­way said it earned $390 mil­lion or $2.36 per di­luted share in the quar­ter that ended June 30, up from $371 mil­lion or $2.11 per di­luted share a year ago.

On an ad­justed ba­sis, the rail­way says its earn­ings per share were up 16 per cent at $2.45, while its op­er­at­ing ra­tio - which tracks op­er­at­ing costs as a per­cent­age of rev­enue - im­proved to 60.9 per cent.

CP main­tained its ex­pec­ta­tion that its op­er­at­ing ra­tio would be be­low 62 per cent.

Creel also said Tues­day that chair­man Gary Colter and di­rec­tor Krystyna Hoeg re­signed from the board over “dis­agree­ments re­lat­ing to cor­po­rate gov­er­nance mat­ters,” but de­clined to pro­vide fur­ther de­tails. An­drew Rear­don was unan­i­mously elected chair­man of CP's board of di­rec­tors.

In May, the Su­pe­rior Court of Que­bec ap­proved a class-ac­tion law­suit against CP by res­i­dents of Lac-Megantic over the train dis­as­ter that killed 47 peo­ple in July 2013. CP said Tues­day it was too early to de­ter­mine any po­ten­tial li­a­bil­ity or losses and re­it­er­ated that it is not li­able for the tragedy.

CP also lost a court chal­lenge last week of a $430-mil­lion set­tle­ment fund pro­posal for more than 4,000 vic­tims and cred­i­tors in con­nec­tion with the de­rail­ment and ex­plo­sion. The com­pany wanted the set­tle­ment ruled un­fair be­cause it would limit CP's abil­ity to sue other firms in­volved. It has said it would re­view the rul­ing.

CP PHOTO

A Cana­dian Pa­cific Rail main­te­nance worker climbs onto a lo­co­mo­tive at the com­pany's Port Co­quit­lam yard east of Van­cou­ver, B.C., on May 23, 2012.. Cana­dian Pa­cific Rail­way Ltd. is plan­ning more job cuts as the com­pany faces lower than ex­pected freight vol­umes and earn­ings

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