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Canadian Pacific Railway Q4 Adj. Profit Meets View, Revenues Top


Canada's second largest railroad operator Canadian Pacific Railway Ltd. (CP, CP.TO) reported Tuesday a profit for the fourth quarter that plunged from last year, hurt by hefty charges. Striping down the charges, adjusted earnings per share matched analysts' expectations, while quarterly revenues topped their estimates by a whisker.

"Canadian Pacific is moving forward on our transformational journey to become the most efficient railroad in North America. This quarter, CP saw strong operating performance as we continued to implement significant changes to how we run the railroad," President and CEO Hunter Harrison said.

The Calgary, Canada-based company reported net income of C$15 million or C$0.08 per share for the fourth quarter, sharply down from C$221 million or C$1.30 per share in the prior-year quarter.

Results for the latest quarter include asset impairment charge of after tax C$170 million or C$0.98 per share, and labor restructuring charge of after tax C$39 million or C$0.22 per share.

Excluding items, adjusted net income for the quarter was C$1.28 per share, compared to last year's C$1.11 per share. On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of C$1.28 per share for the quarter. Analysts' estimates typically exclude one-time items.

Canadian Pacific's revenues for the quarter increased 6.4 percent to C$1.50 billion from C$1.41 billion in the same quarter last year, and topped fifteen Wall Street analysts' consensus estimate of C$1.49 billion by a whisker.

Revenues from freight services rose 6 percent to C$1.46 billion, and other revenues also grew 15 percent to C$38 million from the prior-year quarter.

Canadian Pacific's total revenue ton-miles or RTMs, for the fourth quarter was 35.53 billion, up 4 percent from the year-ago quarter, and total freight revenue per RTM grew 2 percent from last year to 4.12 cents.

Total carloads for the quarter edged up 1 percent from the year-ago quarter to 680,000, and total freight revenue per carload also grew 6 percent from the prior-year quarter to $2,153.

Operating income for the quarter plunged 80 percent to C$60 million from C$303 million in the year-ago quarter, and total operating expenses were C$1.44 billion, up 30 percent from the prior-year quarter.

For fiscal 2012, the company reported net income of C$484 million or C$2.79 per share, lower than C$570 million or C$3.34 per share in the prior year.

Total revenues for the full year increased 10 percent to C$5.70 billion from C$5.18 billion in the previous year.

Street was looking for full-year 2012 earnings of C$4.30 per share, on annual revenues of C$5.68 billion.

Looking ahead to fiscal 2013, the company expects adjusted earnings per share to grow more than 40 percent, on projected annual revenue growth in the high single digits. Analysts currently expect the company to report earnings of C$5.78 per share, on annual revenues of C$6.11 billion for the full-year 2013.

"Management made a number of hard decisions this quarter including booking several significant items. With these decisions now behind us, we anticipate record-setting financial and operational results starting in 2013," Harrison added.

CP closed Monday's regular trading session at $112.01, up $0.17 on a volume of 0.71 million shares. In the past 52-week period, the stock has been trading in a range of $68.69 to $113.25.

CP.TO closed on the Toronto stock exchange at C$112.77, up C$0.07 on a volume of 0.48 million shares. In the past 52-week period, the stock has been trading in a range of C$71.37 to C$114.20.

by RTTNews Staff Writer

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