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Rail News: Financials

Cloudy coal forecast could put CPR's 2006 earnings in deep freeze

Next year, Canadian Pacific Railway expects its coal traffic to decrease because major customer Fording Canadian Coal Trust is forecasting a production drop due to a global shortage of tires for coal-hauling trucks. The Class I serves all southeastern British Columbia mines owned by Elk Valley Coal Partnership (EVC), which is 60 percent owned by Fording.

“EVC is experiencing a short-term supply issue, which we believe does not alter the strong medium- to long-term fundamentals for metallurgical coal in world markets,” said CPR President and Chief Operating Officer Fred Green in a prepared statement.

However, the declining coal traffic combined with softening automotive business will reduce 2006 earnings, CPR officials believe. Earnings per share will range between $3.60 and $3.85 compared with a previous estimate of $3.70 to $3.85 per share.

Officials still anticipate an increase in grain, merchandise and intermodal traffic next year. In addition, they expect CPR to continue cutting costs; currently, the Class I is reorganizing and reducing administrative staff.

Contact Progressive Railroading editorial staff.

More News from 12/13/2005