Labour troubles weighed on railway’s performance, CP says
TORONTO Canadian Pacific Railway Ltd.’s chief executive said labour negotiations and a brief worker strike slowed the company’s momentum in the second quarter and contributed to a nine per cent decrease in profit.
The railway reported on Wednesday that its second quarter net profit fell to $436 million, or $3.04 diluted earnings per share in the three month period ending June 30, as compared to $480 million, or $3.27 per share, at the same time last year.
The decrease was due in part to the company winding down some of its services in anticipation of a strike by two of its unions — the Teamsters Canada Rail Conference (TCRC) and the International Brotherhood of Electrical Workers (IBEW ) — in May.
“As you can imagine, winding down the railway, the stop and start, and winding back up the railway certainly created some inconvenience, some disruptions, additional costs and slowed movement,” chief executive Keith Creel said on a conference call with analysts following the release of the company’s results on Wednesday. “That process had an influence to the quarter relative to cost, as well as curtailing revenues and certainly pain experience and associated with that for our customers.”
Creel added that he is confident the labour headwind will become a tailwind, now that the company has reached agreements with the two unions. In May, CP reached a tentative agreement with TCRC, the union that represents 3,000 conductors and locomotive engineers. Results of the ratification of that agreement are expected on Friday. A three-year deal with the IBEW was ratified in June.
“With labour stability in place, strong underlying network performance and a robust demand environment, the path is clear and the opportunities are many,” Creel said in a statement.
Despite the profits’ dip, revenues rose by seven per cent from $1.64 billion last year to $1.75 billion.