CP train
CALGARY, ALBERTA, CANADA — It was a tale of two stories on the grain front at Canadian Pacific Railway Ltd. during the fourth quarter, as revenues in the United States trended lower while results in Canada were stronger.

“U.S. grain revenues were down 14% against tough comps and actually tougher market conditions,” John K. Brooks, senior vice-president and chief marketing officer, said during a Jan. 18 conference call. “Meanwhile, Canadian grain revenues grew 6%. Despite derailments in November and tough weather conditions in December, in our Canadian grain franchise, we delivered record revenue.

“From an outlook perspective, the Canadian grain crop came in slightly better-than-expected, now near 71 million (tonnes). This should provide more opportunity for grain movements as we move midyear into 2018. The U.S. grain market, however, continues to prospect a headwind as we move through 2018.

Net income at CP in the fourth quarter ended Dec. 31, 2017, was C$984 million, equal to C$6.79 per share on the common stock, up sharply from C$384 million, or C$2.63 per share, in the same period a year ago. Overall, net income at CP in the year ended Dec. 31, 2017, totaled C$2.405 billion, equal to C$16.49 per share, up 50% from C$1.599 billion, or C$10.69 per share, in fiscal 2016.

Total revenues for the fourth quarter increased to C$1.713 billion from C$1.637 billion. For the full year, total revenues increased 5% to C$6.554 billion from C$6.232 billion.

Grain freight revenues in the fourth quarter fell 3% to C$425 million from C$439 million in the same period a year ago, but for the full year totaled C$1.532 billion, up 4% from C$1.48 billion in the same period a year ago.

Nadeem Velani, executive vice-president and chief financial officer, said CP plans to spend between C$1.35 billion and C$1.5 billion in capital during 2018, with a significant portion allocated for upgrading the company’s grain hopper fleet.

“We are awaiting the final outcome of Bill C49 before making a decision,” Velani said. “That being said, the proposed changes are positive, and investing in a modernized grain hopper fleet would have substantial benefit to both CP and our customers. If all goes as planned, we might begin investing in hoppers later this year, but the timing and full amount is yet to be determined.”