(CPR issued the following news release on October 26.)
CALGARY — Canadian Pacific Railway today reported third-quarter 2004 net income of $177 million, or $1.11 per diluted share, compared with net income of $91 million, or $0.57 per diluted share in the same period of 2003. The increase included an after-tax gain of $73 million on foreign exchange on long-term debt. Volumes grew in six of seven business lines, including a 9-per-cent jump in intermodal, which is on pace to become a $1-billion business line for CPR this year.
Excluding foreign exchange gains and losses on long-term debt, income in third-quarter 2004 increased 9 per cent to $104 million, or $0.65 per diluted share, compared with $95 million, or $0.60 in third-quarter 2003.
Rob Ritchie, President and Chief Executive Officer of CPR, said: “I am very pleased with the ongoing growth in our business and the upward trend in CPR’s yield and operating performance accomplished by our people, who are working to drive more of this growth to the bottom line. We successfully completed an unprecedented program of track maintenance on our busy western corridor in a compressed time period while moving more freight than ever before. With several pinch-points removed, more new locomotives arriving in the coming weeks and 500 new people now qualified to operate trains, CPR has entered the fall peak season well positioned to handle anticipated freight volumes and to keep our network fluid.
“Record world oil prices remain a challenge in the transportation sector. However, CPR’s improved fuel surcharge program, which enables CPR to pass on higher prices more quickly, is generating solid results. The new surcharge program, in combination with indexing and a favourable hedge position, enabled CPR to recover about three-quarters of our price-related fuel cost increase in the third quarter,” Mr. Ritchie said.
SUMMARY OF THIRD-QUARTER 2004 COMPARED WITH THIRD-QUARTER 2003
– Operating income of $219 million, an increase of 8 per cent
– Revenue up $85 million, with increases in all business lines except grain, where a late harvest delayed rail shipments
– Operating expenses up $70 million, driven by higher freight volumes and fuel prices, temporary costs to train additional crews, and a return to a normal level of performance-based incentive compensation
– Operating ratio of 77.9 per cent, compared with 77.5 per cent
SUMMARY OF FIRST NINE MONTHS 2004 COMPARED WITH FIRST NINE MONTHS 2003
– Net income of $284 million, or $1.79 per diluted share, compared with $227 million, or $1.43 per diluted share
– Excluding foreign exchange gains and losses on long-term debt and a special charge, income of $245 million, or $1.54 per diluted share, compared with $216 million, or $1.36 per diluted share (special charge in 2003 for job reductions, an asset write-down and network restructuring)
– Excluding the special charge in 2003, operating income of $556 million, up $48 million
– Revenue up $184 million, led by a $74-million increase in intermodal freight and a $60-million increase in coal
– Excluding the special charge in 2003, operating expenses up $136 million, largely due to a $75-million increase in compensation and benefits reflecting growth-generated hiring and training, and a return to a normal level of performance-based incentive compensation
– Excluding the special charge in 2003, operating ratio improved by 0.5 percentage point to 80.7 per cent
The translation impact of the stronger Canadian dollar reduced year-to-date revenues and operating income by $98 million and $22 million, respectively. Income, excluding foreign exchange gains and losses on long-term debt and the special charge, was reduced by $6 million.
OUTLOOK
CPR expects continued strong freight volumes through the remainder of the year, including shipment of a near-normal grain crop, which entered the transportation system late after a delayed harvest.
Diluted earnings per share, excluding foreign exchange gains and losses on long-term debt and other specified items, are expected to grow by 5 per cent to 10 per cent in 2004, over restated and adjusted earnings per share of $2.07 in 2003. This is based on oil prices averaging US$50 per barrel and an average exchange rate of $1.29 per U.S. dollar (US$0.78) in the fourth quarter of 2004.