CP reports 'strong performance' in 2018

Canadian Pacific yesterday announced record operating income of CA$874 million for the fourth quarter, a 28 percent increase compared with the same period in 2017.

CP's revenue for the quarter climbed 17 percent to CA$2 billion from CA$1.7 billion a year ago. Q4 diluted earnings per share (EPS) fell 43 percent to $3.83 from $6.77 a year ago, however adjusted diluted EPS rose 41 percent to a new quarterly record of $4.55 from $3.22 in 2017, according to a CP press release.

The Class I's operating ratio improved by 370 basis points to 56.5 percent, CP officials said. Total operating expenses increased to CA$1.13 billion from CA$1 billion in Q4 2017.

CP reports its financial results in Canadian dollars, except for share and per share data.

"The power of the CP operating model is evident in the strong performance across the company," said President and Chief Executive Officer Keith Creel. "We set records across many lines of business in 2018, including Canadian grain, potash and domestic intermodal."

The railroad continues to rely on the foundations of precision scheduled railroading to achieve sustainable, profitable growth, company officials said.

"This approach in 2018 enabled CP to deliver its highest-ever revenues, lowest-ever yearly operating ratio and a 13th consecutive year leading Class I railways with the lowest train accident frequency," they said.

For full-year 2018, CP's revenue rose 12 percent to CA$7.3 billion from CA$6.6 billion in 2017; operating ratio improved to a record 61.3 percent; and diluted EPS fell 17 percent to $13.61 from $16.44, while adjusted diluted EPS rose 27 percent to $14.51 from $11.39.

Total operating expenses for full-year 2018 rose to CA$4.5 billion from CA$4 billion a year ago.

According to full-year guidance for 2019, CP expects double-digit adjusted diluted EPS growth versus 2018 adjusted diluted EPS of $14.51; mid-single-digit volume growth as measured in revenue ton miles; and capital expenditures of CA$1.6 billion.

"We are entering 2019 with tremendous momentum and a commitment to operating the precision scheduled railroading model in its true form," said Creel.

Meanwhile, CP officials today announced the Class I extended its long-term agreement to serve as Hapag-Lloyd AG's preferred rail carrier in Canada.

The agreement will allow Hapag-Lloyd's customers to benefit from CP's growing network of transload facilities, its live-lift operation at Portal, North Dakota, and the "fastest transit times between Vancouver and the Twin Cities, Chicago and beyond," CP officials said.

Added Hapag-Lloyd CEO Rolf Habben Jansen: "With CP we are able to handle more cargo and take advantage of shorter routes to key markets, and provide long-term value to our customers."