(Dow Jones Newswires circulated the following on April 23, 2009.)
NEW YORK — Canadian Pacific Railway Ltd. (CP) posted much lower earnings in the first quarter, mainly reflecting declining freight-traffic volume.
The Calgary-based railway reported net income of C$62.5 million or 39 Canadian cents in the quarter. Excluding items, it earned 34 Canadian cents a share, behind the mean analyst forecast of 48 Canadian cents.
A year earlier, it earned C$90.8 million or 59 Canadian cents a share on a GAAP basis and 75 Canadian cents on an adjusted basis.
Revenue fell 6.6% to C$1.07 billion, slightly ahead of analyst expectations for C$1.04 billion.
The company’s operating ratio, or percentage of operating revenue consumed by operating expenses, was 87.0%, compared with 82.4% last year. An increase represents higher expenses compared to revenue, and is therefore a worse result.
Analysts have remarked on declining volumes at Canadian Pacific, noting that March volumes were lower than in February and January, and that April looks even worse. While the situation is much the same at other railroads, Canadian Pacific has been particularly hard-hit because of its significant exposure to fertilizer and coal. Intermodal traffic is also down, as shipments to and from Asia slump.
Top company executives warned at investor conferences recently that jobs and capital expenditures would be reduced if volumes didn’t recover. Thursday’s earnings press release didn’t mention any new layoffs but the company noted that it has laid off more than 2,400 employees so far this year.
The company said it will reduce its 2009 capital program to C$720-C$740 million from the original forecast of C$800-C$820 million.
Rival Canadian National Railway Co. (CNI) blew past expectations when it released first-quarter results this week, as a result of productivity improvements achieved despite a sharp drop in volumes.
Wednesday in Toronto, Canadian Pacific closed at C$41.00, down 44 Canadian cents.