CP Rail earnings exceed forecasts

Lower expenses, shipping buoy firm

Canadian Pacific Railway beat analysts’ estimates for quarterly profit on Wednesday, driven by lower fuel expenses and as it shipped more coal, crude and fertilizers.

The company’s results came a day after larger rival Canadian National Railway Co. missed estimates for quarterly revenue and cut its adjusted profit forecast for the year citing declining freight demand in North America.

CP said average fuel price fell 10 per cent to US$2.41 per gallon in the third quarter, leading to a 7.1 per cent fall in fuel expenses.

Total carloads, the amount of freight loaded into cars during a specified period, rose 1.4 per cent, while rail freight revenue per carload increased three per cent, CP said.

Revenue in the energy, chemicals and plastics segment, which also contains its crude-by-rail shipments, rose 13 per cent to C$382 million.

However, the company reduced its volume expectations for the year to low-single digit revenue ton-mile (RTM) from mid-single digit RTM on delays in the Canadian grain harvest and export potash volumes.

The country’s second-largest railroad operator said adjusted net income rose 8.7 per cent to $640 million or $4.61 per share, in the quarter ended Sept. 30.

Analysts on average had estimated earnings of $4.52, according to IBES data from Refinitiv.

Chief executive Keith Creel said in a statement the railroad operator now expects lower volume growth for the year but remains confident in its financial forecast of double-digit growth for adjusted diluted earnings per share.