Transcontinental railway operator Canadian Pacific Railway Limited (CP, CP.TO), Thursday reported an increase in profit for the fourth quarter helped primarily by a 17% decline in operating expenses, notwithstanding a 16% decline in revenues.
The Calgary, Canada-based company's fourth quarter net income was C$194 million, up 3% from C$188 million in the year-ago period. On per share basis, earnings declined to C$1.15 from C$1.21 in the same quarter last year, on a higher share count for the current quarter.
Net earnings per share of C$0.21 for the quarter had a positive impact of foreign exchange gain and loss on long-term debt, including a charge on the termination of a shortline railway lease, and two favorable income tax items.
Canadian Pacific had a net foreign exchange loss after tax of C$1.4 million on long-term debt in the fourth quarter of 2009, compared with a gain of C$22 million after tax in prior year quarter. The company also recorded a C$38 million after tax charge on the early termination of a shortline railway contract. A tax rate change resulted in a C$48 million gain, and an income tax settlement related to a prior year resulted in a benefit of C$26 million.
Excluding items, adjusted earnings per share for the fourth quarter was C$0.94, down 12% from C$1.07 in comparable quarter last year.
The company's revenue for the quarter declined 16% to C$1.1 billion, from C$1.3 billion in the prior year quarter.
Analysts polled by Thomson Reuters expected the company to earn $0.83 per share on revenue of $1.13 billion for the fourth quarter.
For the third quarter 2009, Canadian Pacific's net income increased to C$195.4 million or C$1.16 per share from C$170.7 million or C$1.10 per share in the year-ago period. On an adjusted basis, earnings for the quarter plunged to C$144 million or C$0.85 per share from C$184 million or C$1.19 per share in the same quarter last year. Revenue declined to C$1.09 billion from C$1.26 billion in the prior year quarter.
Canadian Pacific's revenues from freight services was C$1.1 billion compared with C$1.2 billion, while other revenues dropped to C$30.9 million from C$41.9 million a year earlier.
Operating expenses slumped to C$853 million from C$1.0 billion last year, while operating income decreased to C$269 million from C$304 million in the year-ago period. Operating ratio improved 120 basis points to 76% in the fourth quarter.
In the recent quarter net interest expense declined to C$62.8 million from C$73.8 million in the prior year quarter.
Fred Green, president and chief executive officer said, "We have come through an extraordinary year of economic challenges and we met these with focused productivity initiatives that have delivered sustainable improvements. Markets remain uncertain and we will continue to drive efficiency while delivering a reliable service. We are positioned with assets and resources to respond to changes in our customers' demand." For the full year 2009, the company reported net income of C$612 million compared to C$607 million in the year-ago period. Earnings per share was C$3.67, down 6% from C$3.91 last year, while adjusted earnings decreased 31% to C$2.76 per share, from C$3.99 per share in the prior year. Revenue declined to C$4.3 billion from C$5.2 billion last year.
Analysts expected the company to earn $2.42 per share on revenue of $4.25 billion for the full year.
Looking forward to fiscal year 2010, the company projected C$680 million to C$730 million spending on capital programs, that includes about C$585 million for the renewal of track infrastructure. The company expects its tax rate to be in the range of 25% to 27%.
Canadian Pacific in December 2009, made a voluntary prepayment of about C$500 million into its defined benefit pension plans to reduce volatility in future pension funding requirements.
Fiscal year 2010 pension contributions are currently estimated to be between C$150 and C$200 million and pension expenses are expected to increase by about C$50 million from last year, mainly due to a decrease in the discount rate used to value the pension benefit obligation and the phasing in of 2008 equity losses.
CP.TO last traded at $52.88, down $1.58 or 2.90% on a volume of 359,997 shares on the Toronto Stock Exchange.
CP is currently trading at $49.58, down $1.44 or 2.82% on a volume of 718,912 shares on the NYSE.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.