(The Globe and Mail posted the following article by Terry Weber on its website on March 18.)
CALGARY — Canadian Pacific Railway Ltd. warned Tuesday that first-quarter earnings will come in below forecasts, with its results showing the wear of high fuel costs and stormy winter weather.
For the quarter, Calgary-based CPR said it expects to post earnings — excluding the impact of foreign exchange and losses on long-term debt — of between 21 cents and 25 cents.
Ten analysts polled by Thomson Financial/First Call had been looking for earnings during the quarter on average of 37 cents a share.
The latest results, the railway said, were hit by consistently high fuel costs and a stormy winter, which has disrupted both CPR’s operations as well as that of its connecting carriers.
“These circumstances are extraordinary and CPR has managed them extremely well,” CPR president and chief executive officer Rob Ritchie said.
“The response by our people has been exceptional. Our recovery from each weather-related challenge has been swift and effective but we have felt the cumulative effects on efficiency and productivity.”
The rail line’s fuel cost management program, which includes “significant” hedge positions, has helped temper the impact of high prices “but cannot fully offset the effect of prices that remain stubbornly above $35 (U.S.) a barrel,” he said.
High fuel costs have wreaked havoc on the world’s transportation sector, forcing airlines to increase fuel surtaxes on passenger tickets while drivers have been hit with record high gasoline prices in recent weeks.