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Canadian Pacific was the last Class I to conduct a fourth-quarter earnings presentation, but the railroad’s financial results weren’t last-place material. Yesterday, CP reported quarterly net income of $182 million, up 3 percent, and an operating ratio of 76, down 1.2 points compared with fourth-quarter 2008 figures. In addition, operating expenses fell 17 percent to $800 million.

“Canadian Pacific finished 2009 on a positive note,” said President and Chief Executive Officer Fred Green during yesterday’s Webcast and teleconference. “We managed effectively in a difficult economic environment.”

Difficult enough to reduce revenue 16 percent to $1 billion, operating income 12 percent to $252 million and diluted earnings per share to 88 cents. However, CP beat Thomson Reuters-polled analysts’ earnings expectation of 83 cents per share.

“We’re satisfied we’re making meaningful progress,” said Green.

The Class I is making headway in the traffic department. Although fourth-quarter volume fell 7 percent to 619,800 units, carloads increased 3 percent vs. third-quarter volume and continue to show “sequential improvement,” said Group Vice President of Sales Ray Foot. Gains in grain and coal traffic helped offset weak potash volume, he said.

CP posted progress with cost control, too. Fuel expenses plummeted 36 percent, compensation and benefit expenses dropped 11 percent, and purchased services/rent expenses fell 11 percent. During the quarter, headcount declined 10 percent vs. a 6 percent drop in workload, a “great example of the productivity improvements we are sustaining,” said Executive VP and Chief Financial Officer Kathryn McQuade.

For the full year, CP’s revenue declined 18 percent to $4 billion, operating income fell 20 percent to $844 million, diluted earnings per share tumbled 31 percent to $2.59, operating expenses decreased 17 percent to $3.2 billion and operating ratio rose 0.7 points to 79.1 compared with 2008 figures.

Senior execs are projecting moderate growth in 2010 because coal and fertilizer volumes will increase, some merchandise segments will rebound, grain volumes will be as good or slightly below 2009’s level and intermodal volume could rise slightly as restocking activity picks up through the first half.

Although many markets “remain uncertain,” CP plans to continue to drive efficiency while delivering reliable service, said Green.

“We are well-positioned to realize operating leverages as volumes recover, particularly for intermodal and merchandise trains,” he said. "We’re going to keep a rein on cost and will be ready to respond to any sustained increase in demand as clearly there’s some potential for volume growth, particularly in the bulk business. But the economic signals on the general economy remain weak and volatile.”

— Jeff Stagl