'Extreme weather' weighs on CP first-quarter earnings

by Eric Schroeder
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CP train
Photos courtesy of CP.
 
CALGARY, ALBERTA, CANADA — Net income at Canadian Pacific Railway Ltd. fell to C$348 million in the first quarter ended March 31, equal to C$2.41 per share on the common stock, down 19% from C$431 million, or C$2.94 per share, in the same period a year ago. Revenues, meanwhile, increased 3.7% to C$1.662 billion from C$1.603 billion.

Keith Creel CP CEO
Keith Creel, president and CEO of CP

“This was a challenging quarter, as we battled extreme weather and unprecedented demand, specifically in the northern reaches of our network,” said Keith Creel, president and chief executive officer of CP. “Despite these challenges, we delivered 6% more freight than last year, demonstrating once again the resiliency of our operating model and the commitment from our family of professional railroaders. With the extraordinary winter weather behind us, we built a tremendous amount of momentum through March — one of our best months in recent history — positioning us well for the rest of the year.”

CP said it generated C$357 million in revenues from movement of grain in the first quarter, down 9% from C$393 million in the same period a year ago.

“On the grain side, Canadian grain volumes were down 4% versus record levels last year,” John Kenneth Brooks, chief marketing officer and senior vice-president, said during an April 18 conference call with analysts. “(We experienced) tough operating conditions in January and February. Despite these challenges though, crop year-to-date CP has moved 2% more grain than the 2016, 2017 crop year, and we expect strong, steady demand as we move into Q2. U.S. grain volumes were a different story, and they were down substantially at 19% as pressure continues to mount against our exports, given their strong global supply.”

Brooks noted that with Thunder Bay open and a lot of shippers sold well into the second quarter into Vancouver, CP is anticipating “big numbers” on its Canadian grain side moving forward.

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