(Reuters circulated the following on February 20.)
TORONTO — Canadian Pacific Railway said on Wednesday it would appeal a grain hopper adjustment by the Canadian Transportation Agency (CTA), that could shave its earnings by up to 13 Canadian cents a share in 2008.
The move by the CTA was announced on Tuesday and relates to railway revenue caps for the movement of Western grain for the crop year 2007-2008. It translates to a C$2.59 per-tonne impact on CP Rail’s revenue entitlement, the company said.
The adjustment is retroactive to Aug. 1, 2007. CP Rail said the CTA’s adjustment was higher than expected.
Calling the move “not supportable,” CP Rail said it now sees earnings per share 5 Canadian cents lower, at between C$4.65 and C$4.80 for 2008.
Canada’s No. 2 railway said it is confident it can successfully appeal the CTA’s decision, but warned the retroactive component of the adjustment could shave an additional 8 Canadian cents a share off the guidance.
Despite the “uncertain economic environment,” CP Rail said it expected to see revenue grow by four to six percent this year, and expenses to increase by three to five percent.
Capital investment is expected in the range of C$885 million to C$895 million in 2008, similar to 2007.
It said it would appeal the CTA decision in federal court.