CP Rail earnings soar

CP Rail earnings soar

Canadian Pacific Railway on Thursday said higher freight volumes drove profits up 146 percent in the second quarter, and looked ahead to "robust" traffic for the remainder of the year.

The railroad earned C$83.7 (US$63 million) in the second quarter ended June 30, compared with $25.7 million in the year-earlier quarter. The previous year's results included charges for job reductions, asset writedown and network restructuring. Strong growth in five of CP Rail's seven business lines pushed revenues to just over US$750 million

But that performance could presage higher costs for the railroad's shippers. "We will continue to pursue value pricing opportunities created by the favorable conditions in our markets," Rob Ritchie, president and chief executive, said in the report from CP Rail's Calgary headquarters. "We expect freight volumes to remain robust for the remainder of 2004."

Bulk commodities accounted for nearly two-thirds of the 10 percent increase in total revenues, from US$689 million. Increases included grain, 13.3 percent; coal, 14.1 percent; and sulphur and fertilizers, 17.1 percent. Revenue from industrial products rose 14.1 percent, while intermodal shipments posted a 9 percent gain on their record second quarter a year ago. The railroad saw weaker revenue for automotive, down 3 percent, and forest products, off 2.4 percent.

In the first half, net income fell to US$80.25 million compared with US$102 million, due to an exchange loss on long-term debt. CP Rail's operating ratio for the first half was better by almost one percentage point to 82.2 percent. Ritchie expected higher earnings per share over the rest of the year despite significantly higher fuel prices.