(Bloomberg News circulated the following article on April 27.)
CALGARY — Canadian Pacific Railway Ltd., the country’s second-biggest railroad, said net income in the first quarter fell 77 percent as costs rose and changes in foreign- exchange rates hurt earnings.
Net income dropped to C$23.5 million ($17.4 million), or 15 cents a share, from C$102.3 million, or 64 cents. The company was expected to earn 30 cents, the average of six analysts surveyed by Thomson Financial.
Sales rose 0.9 percent to $C886.6 million from C$878.8 million a year earlier. The foreign-exchange effect of long-term debt reduced profit by C$13.3 million in the latest quarter, while increasing it C$70.8 million in last year’s period.
The Calgary-based company said costs rose 1.2 percent to C$770.6 million. Last month, Canadian Pacific said that derailments, coupled with increased shipping demand for such commodities as grain and coal used to make steel, caused a backlog across its network particularly in Calgary and Toronto.
Profit before interest and taxes fell 1.6 percent to C$116 million.
Derailments in January significantly reduced train speeds and increased waiting times in yards, RBC Capital Markets analyst Joseph Leinwand wrote in a Feb. 17 report. Aside from “creating operating difficulties, damages from derailments are costly,” he said. Canadian Pacific has said it will add locomotives and crews this year to improve service.
Canadian Pacific shares fell 1 Canadian cent to $23.59 yesterday in Toronto trading and have risen 3.8 percent in the past 12 months.
Montreal-based Canadian National Railway Co. is the country’s biggest railroad.