CP Q3 revenue falls 9 percent, names Velani CFO

Canadian Pacific's third-quarter revenue fell 9 percent to 1.55 billion Canadian dollars, while diluted earnings per share (EPS) rose 15 percent to CA$2.34 compared with revenue and earnings in third-quarter 2015, the Class I announced this morning.

The railroad also announced an operating ratio of 57.7 percent, the "lowest-ever" when compared with adjusted operating ratios in previous quarters, CP officials said in a press release. In third quarter 2015, the Class I set a then-Q3 ratio record at 59.9.

Analysts expected CP's Q3 revenue to come in around CA$1.23 billion and an EPS of CA$2.79 per share. CP posted an adjusted diluted Q3 EPS of CA$2.73.

"Despite decreased revenues, tied to a delayed grain harvest and stiff economic headwinds, our business model continues to perform on the cost side," said CP Chief Executive Officer E. Hunter Harrison. "Our commitment to efficiency, asset optimization, and operational excellence has produced yet another record-low operating ratio."

By commodity, CP reported adjusted revenue during the quarter rose 1 percent for U.S. grain, 5 percent for fertilizers and sulphur, 8 percent for forest products, and 1 percent for chemicals and plastics. International intermodal revenue increased 5 percent for the quarter.

Commodities that posted revenue decreases during the quarter were Canadian grain, down 15 percent; coal, down 2 percent; potash, down 1 percent; crude, down 88 percent; metals, minerals and consumer products, down 18 percent; and automotive, down 1 percent. Domestic intermodal revenue declined 2 percent.

Considering the delayed grain harvest, lower crude volumes, a challenging Canadian economy compounded by a strengthening Canadian dollar, the company is now expecting mid-single-digit growth for 2016, according to Harrison.

"While disappointed that we will not meet our previous forecast, I am incredibly proud that despite these challenges, CP will deliver its lowest-ever annual operating ratio," said Harrison. "Our industry-leading operating plan and continued focus on improving service to our customers means we are well-positioned to capitalize on increasing volumes leading into 2017."

Meanwhile, CP announced Nadeem Velani has been named vice president and chief financial officer. Velani has been serving as vice president and interim CFO since Sept. 9.

Velani joined CP in March 2013 and served as VP of investor relations before becoming interim CFO. Prior to CP, he worked for 15 years at CN, where he served in strategic and financial planning, investor relations, sales and marketing and the office of president and CEO.