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Rail News: Canadian Pacific

CP: Revenue and income climb, but so does the operating ratio


Despite a 6 percent drop in intermodal traffic and overall flat volume in the fourth quarter, Canadian Pacific generated revenue of $1.37 billion and registered diluted earnings per share of $1.30 compared with $1.26 billion and $1.09, respectively, in fourth-quarter 2010. (All figures are in Canadian dollars.)

Carloads totaled 676,000 units versus 674,000 units in the year-ago period as automotive loads climbed 15 percent to 39,000 units, industrial and consumer products volume rose 12 percent to 114,000 units, and grain traffic increased 3 percent to 121,000 units, helping to offset the weak intermodal volume. Automotive revenue jumped 25 percent to $94 million; coal revenue leaped 25 percent to $158 million; industrial and consumer products revenue climbed 20 percent to $288 million; grain revenue increased 8 percent to $323 million; and sulphur and fertilizers revenue inched up 1 percent to $133 million. Forest products revenue dipped 6 percent to $47 million and intermodal revenue fell 2 percent to $332 million.

Quarterly operating income inched up by $5 million to $303 million and net income rose by $35 million to $221 million, but operating expenses increased by $109 million to $1.1 billion — primarily because fuel costs climbed by $65 million to $267 million — and CP’s operating ratio ratcheted up 1.5 points to 78.5.

In terms of operational performance, car miles per car day and terminal dwell both improved by 20 percent in the quarter, active cars online improved 14 percent while handling 5 percent more gross ton miles during the quarter and train weights set a new full-year record, CP officials said in a prepared statement.

For the full year, revenue increased by $114 million to $5.2 billion compared with 2010. But operating income dropped by $149 million to $967 million, net income decreased by $81 million to $570 million, diluted earnings per share declined by 51 cents to $3.34, operating expenses rose by $345 million to $4.2 billion and the operating ratio climbed by 3.7 points to 81.3.

“The operational improvements we have already achieved will now begin to drive enhanced financial results in the first quarter of 2012 and, as we continue to execute on our multi-year plan, further operational improvements will deliver financial benefits,” said CP President and Chief Executive Officer Fred Green. “Given our recent market successes and operating trends, we can now with confidence narrow our target operating ratio range to 70 to 72 percent in three years, and we have no intention of stopping there."

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