(The Globe and Mail posted the following article by Roma Luciw on its website on April 25.)
OTTAWA — Canadian Pacific Railway Ltd. reported a slight increase in first-quarter sales Thursday but profit tumbled 25 per cent on soaring fuel costs and severe winter weather.
After the close of trading, Calgary-based CPR said it posted a profit of $102-million or 64 cents a share, down from a year-earlier $136-million or 86 cents.
Sales for the quarter rose slightly to $879-million from $875-million.
We were successful at exceeding last year s first-quarter revenues despite weather-related conditions that impeded the flow of traffic and despite a sizable decline in grain volumes, Rob Ritchie, CPR s president and chief executive officer, said in a release.
Record-high fuel costs throughout the first quarter contributed to the loss, CPR said. Fuel costs rose to $105.6-million from $83.6-million in last year s first quarter.
Prolonged periods of extreme cold and heavy snow buildup disrupted operations until mid-March and required additional resources to lessen the effect on service levels, Mr. Ritchie said.
In reaction to the difficult first quarter, CPR announced in March that it will eliminate 300 positions in 2003 and initiate other cost-reduction initiatives.
On Thursday, the railway operator said business, and in particular freight volumes, have rebounded in the second half of March.
We anticipate an improved Canadian grain crop but it will only begin to move off the prairies in the last quarter. Our most difficult challenge will be to fully recover the slippage in the first quarter while dealing with fuel prices that are unpredictable,” Mr. Ritchie said.
Shares of CPR stock price fell by 9 cents on the Toronto Stock Exchange Thursday to close at $66.55.
On Wednesday, rival Canadian National Railway Co. said first-quarter profit fell 11 per cent for many of the same reasons: a stagnant U.S. economy, a poor Prairie harvest and unusually cold weather.