Extraordinarily severe winter didn't weigh down CP's financial performance in Q1

Despite a severely harsh winter that hampered operations in both Canada and the United States, Canadian Pacific posted its best first-quarter financial results in the Class I's history.

Total revenue rose 1 percent to $1.5 billion, operating income jumped 17 percent to $423 million, reported net income climbed 16 percent to $254 million, or $1.44 per diluted share, operating expenses declined 4 percent to $1.1 billion and the operating ratio dropped 3.8 points to 72 compared with first-quarter 2013 results (all monetary figures are in Canadian dollars).

CP estimates that the trying winter impacted earnings by 30 to 35 cents per share versus more typical operating conditions. For example, a network disruption in Chicago was prolonged throughout the quarter and is just starting to ease now.

"CP delivered solid results in a period that was severely impacted by extraordinary cold and severe winter weather conditions," said Chief Executive Officer E. Hunter Harrison in a press release.

By commodity group, industrial and consumer products revenue rose 11 percent to $412 million and grain revenue increased 4 percent to $327 million. However, fertilizers and sulphur revenue tumbled 12 percent to $134 million, automotive revenue fell 9 percent to $88 million, forest products revenue declined 9 percent to $48 million, intermodal revenue dipped 2 percent to $317 million and coal revenue slipped 1 percent to $148 million. Overall, freight revenue ratcheted up 1 percent to $1.48 billion even though total volume decreased 6 percent to 618,000 units.

Operational performance metrics in the quarter reveal the hard winter's chilling effects. On a year-over-year basis, average train speed fell from 18 mph to 15.9 mph and average terminal dwell time rose from 6.6 hours to 10.3 hours. But CP increased average train weight and length, maintained locomotive productivity, and reduced both train accidents per million train miles and injuries per 200,000 manhours despite the weather challenges.

"In the face of such difficult operating conditions, I am particularly proud of the women and men of CP who remained on the job 24/7 to keep the railway operating," said Harrison.

Looking ahead, CP's 2014 guidance projects the Class I by year's end will increase revenue by 6 percent to 7 percent, achieve earnings growth equal to or greater than 30 percent and reduce the operating ratio to 65 or lower compared with 2013 results.

"Despite a slow start to the year and the reduced capacity which limited our ability to meet strong customer demand, we still have the utmost confidence in our ability to achieve our financial targets for 2014," said Harrison.