(The following story by Terry Weber appeared on the Globe and Mail website on January 27.)
TORONTO — Canadian Pacific Railway Ltd. said Tuesday fourth-quarter profit rose nearly 40 per cent as freight volumes hit new records and commodity exports in the West saw unprecedented growth helped take the sting out of a rising Canadian dollar.
For the quarter ended Dec. 31, CPR reported net income of $175-million or $1.10 a share, up from $126-million or 79 cents in the same period a year earlier.
Operating income, excluding a loss on assets transferred to IBM Canada Ltd. under an outsourcing agreement, was $226-million compared with $238-million.
In total, operating income was cut by $24-million as a result of a stronger Canadian dollar.
Revenue rose to $963.5-million from last year’s $950.4-million.
The revenue gains were linked to a recovery in the commodity sector that began late in the third quarter as well as an improved grain crop and strong demand for coal and sulphur and a robust potash market.
“Across the CPR network, freight volumes hit a record high and our bulk commodity exports off the West Coast reached unprecedented growth rates,” CPR president and chief executive officer Rob Ritchie said.
“CPR set a record for train lengths and moved significantly more tonnage per train, generating higher productivity.”
Although the railway’s business managed about 10 per cent growth in the fourth quarter, Mr. Ritchie also said most of that was offset by a significant gain in the Canadian dollar.
CPR’s results are affected when U.S.-dollar denominated earnings and expenses are translated into Canadian dollars. Operating income was also reduced because a higher percentage of revenues than expenses are generated in U.S. dollars.
That impact, however, was offset largely by a reduction in the cost of long-term debt in U.S. currency, the railway said. CPR has arranged more than three-quarters of its long-term debt in U.S. dollars.