Canadian Pacific posts Q2 revenue growth of 7 percent

Canadian Pacific reported yesterday that its second-quarter revenue rose 7 percent to CA$1.7 billion from CA $1.64 billion compared with the same period a year ago. 

The Class I's second-quarter diluted earnings per share declined 7 percent to $3.04 from $3.27 per share a year ago. CP reported the per-share numbers in U.S. dollars.

Net income for the quarter dipped to CA$436 million from CA$480 million a year ago. Q2 2018 operating income rose to CA$627 million from $611 million in Q2 2017.

"Overall, it was a good quarter that sets the franchise up well for the remainder of 2018 and beyond," said President and Chief Executive Officer Keith Creel in a press release.

Service interruptions related to labor negotiations and strike notices affected the quarter's performance, Creel said.

"However, we were able to reach tentative long-term agreements with both the Teamsters Canada Rail Conference and the International Brotherhood of Electrical Workers which will serve the CP family, customers, shareholders and the North American economy well for years to come," he said.

Volume in the quarter, as measured by revenue ton miles, rose 4 percent during the quarter, while carloads increased 2 percent compared with a year ago. CP's operating ratio rose to 64.2 percent compared to last year's restated operating ratio of 62.8 percent.

The Class I is positioned well for a strong second half of the year, Creel said.

"With labor stability in place, strong underlying network performance and a robust demand environment, the path is clear and the opportunities are many," he said.

CP's Q2 2018 earnings and revenue were better than expected due to higher shipments of key commodities, according to Zacks Equity Research.