Canadian Pacific Railway Ltd. (CP) third-quarter profit of 85 cents per share was ahead of the Zacks Consensus Estimate of 75 cents per share. The company had reported earnings of $1.19 per share in prior-year quarter. Earnings suffered due to a decline in volumes and lower fuel surcharge, partially offset by reduced costs.
Total revenues for the quarter were $1.1 billion, down 20% from $1.4 billion last year. Lower volumes and fuel prices were the key drivers of the decline. Operating expenses were $827 million, down 20% from $1.0 billion. A fluid railway, strong cost management and lower fuel prices were the primary drivers.
Operating income was down 21%, other income and interest expense were in line compared to last year. Operating expenses were down 14.3% year over year. The largest contributor to the decline was lower fuel expense. Operating ratio increased 20 basis points to 76%.
For the year, Canadian Pacific expects to complete a capital program of $800–820 million. During the quarter, the company completed two land sales which added almost $130 million to the cash position.
Canadian Pacific continues to face volumes that are below last year’s, though sequential improvements in some sectors have occurred. The company continues to focus on cost control, liquidity and sustainable productivity improvements to build flexibility in all aspects of its business.
Last week, peer Union Pacific (UNP) reported third-quarter earnings of $1.02 per share, 36 cents lower than that of last year due to suffering at the hands of the global recession and a related decline in rail traffic.
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Read the full analyst report on “UNP”
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