CP sets new financial-growth goals for the next four years

Canadian Pacific Chief Executive Officer E. Hunter Harrison yesterday unveiled new financial growth targets to 2018, including a goal to more than double earnings per share over the next four years.

CP also plans to grow annual revenue to $10 billion and generate cumulative cash flow before dividends of $6 billion by 2018.

"Our transformation over the last two years has been nothing short of remarkable, but the journey is far from over," said Harrison in a press release. "We've dramatically improved the operating performance of the company; our operating ratio is approaching industry best and we've generated significant value for shareholders. Our achievements of the past two years have set the platform for future growth."

The new targets and growth strategy are built on a foundation of performance and discipline that will enable the railroad to achieve its 2016 objectives two years early, including an operating ratio in the mid-60s and cash flow before dividends of $1 billion, he said.

Over the next four years, CP also will focus investments in key corridors to leverage franchise strengths, including siding extensions and terminal enhancements, and provide premium service driven by velocity, said Harrison.

"Our talented and dedicated people are challenging the status quo each day and are ultimately enabling us to grow with our customers at a low incremental cost to the franchise," he said.

Associated with the targets and growth strategy, CP executives are assuming that capital spending will range from $1.4 billion to $1.6 billion (in Canadian dollars) over the four-year period, and that pension expenses and contributions, the exchange rate and fuel prices will hit certain levels.