Canada’s two largest railways report job cuts
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.
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