A number of organizational and operational changes made by Canadian Pacific last year paid off on some levels in the fourth quarter. Today, the Class I reported that fourth-quarter diluted earnings per share (EPS), excluding certain significant items, increased 15 percent to $1.28 compared with the year-ago period. Reported diluted EPS, inclusive of significant items, totaled $1.30 (all figures are in Canadian dollars).
The items include a $53 million labor restructuring charge, which unfavorably impacted diluted EPS by 22 cents; a $185 million impairment of Powder River Basin and other investments, which unfavorably impacted diluted EPS by 64 cents; and an $80 million asset impairment of certain locomotives, which unfavorably impacted diluted EPS by 34 cents, CP officials said in a prepared statement.
On a year-over-year basis, CP also reported 4Q total revenue of $1.5 billion versus $1.4 billion, operating income of $60 million versus $303 million, net income of $15 million versus $221 million and total operating expenses of $1.4 billion versus $1.1 billion. The Class I's quarterly operating ratio, excluding the significant items, improved 3.7 points to 74.8, but the reported operating ratio climbed 17.5 points to 96. Volume rose 1 percent to 680,000 carloads.
"Canadian Pacific is moving forward on our transformational journey to become the most efficient railroad in North America," said CP President and Chief Executive Officer E. Hunter Harrison. "This quarter, CP saw strong operating performance as we continued to implement significant changes to how we run the railroad."
For the full year, CP reported total revenue of $5.7 billion compared with $5.2 billion in 2011. Diluted EPS totaled $2.79 versus $3.34 a year earlier, operating income totaled $949 million versus $967 million, net income totaled $484 million versus $570 million, operating expenses totaled $4.7 billion versus $4.2 billion and volume totaled 2.7 million carloads versus 2.6 million. The reported operating ratio climbed 2 points to 83.3.
Although management made a number of hard decisions in the fourth quarter, including booking several significant items, those decisions are "now behind us," said Harrison.
"We anticipate record-setting financial and operational results starting in 2013," he said.
Among the full-year expectations: Revenue will grow in the high single digits, the operating ratio will drop into the low 70s and diluted EPS will exceed a 40 percent increase versus 2012's mark, excluding significant items, CP officials said.
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