CP posts first quarterly revenue gain since 2015

Canadian Pacific yesterday announced first-quarter 2017 revenue rose 1 percent to 1.6 billion Canadian dollars from CA$1.59 billion a year ago.

The revenue growth was the first in six quarters, company officials said.

"We turned a corner in March and are now seeing positive volumes, which makes us cautiously optimistic that the demand environment is improving," President and Chief Executive Officer Keith Creel said in a press release and in an earnings conference call.

CP's net income declined to CA$431 million in Q1 2017 from CA$540 million in the same period a year ago. The Class I reported earnings per share (EPS) fell 17 percent to CA$2.93 from CA$3.51 a year ago, while adjusted diluted EPS remained flat year-over-year at CA$2.50.

CP's reported operating ratio fell by 80 basis points to 58.1 percent from 58.9 percent. However, the OR in the quarter includes a CA$51 million recovery associated with the early departure of E. Hunter Harrison, who left CP as CEO earlier this year to become head of CSX Corp. Excluding that adjustment, the operating ratio increased by 240 basis points to 61.3 percent.

"CP's strong focus on developing its bench strength resulted in a seamless leadership transition and a seasoned executive team that is focused on leveraging CP's proven operating model," Creel said. "Our talented and engaged workforce together with disciplined cost control gives us a great deal of confidence that we'll be able to deliver high single-digit adjusted diluted EPS growth in 2017 and create long-term value for shareholders."

Meanwhile, Creel also announced that CP and the United Steelworkers Local 1976 have reached a five-year agreement that will cover 600 administrative support and intermodal employees. The agreement was reached and ratified early, as the existing contract doesn't expire until the end of 2017, Creel said.

The agreement calls for wage increases of 2 percent each year over the term of the contract. Also, the contract provides the opportunity for additional increases of 0.5 percent to 1 percent in the fourth and fifth years depending on gains in revenue ton miles.

"CP's support staff personnel and intermodal employees are integral to our company's best-in-class service and our future success," said Creel. "This innovative agreement is an example of the positive results that can be achieved when people work together in good faith."