Wednesday, October 24, 2012
Canadian Pacific and Canadian Northern railways third quarter profits rise
Canadian Pacific and Canadian Northern railways recently posted third quarter earnings with results better than expected for CP profits, which rose 20 percent year on year, while CN was up 1 percent.
In the midst of major restructuring, Canadian Pacific Railway reported a net third quarter profit of $224 million, up 20 percent from the same time last year. On a per-share diluted basis, profit was $1.30, 18 percent higher than the third quarter of 2011.
"The team has made significant progress on operational improvements, controlling costs and on delivering results. And this is just the beginning," said rail veteran Hunter Harrison, CP's new president and chief executive officer, in a statement before the markets opened on Wednesday.
Canadian Northern Railway did better than predicted in its third quarter, but voiced concern about the fourth quarter due to doubts about the global economy and rising costs, including a potential $250 million voluntary pension contribution due by the end of the year.
CN's third quarter net earnings were a bit better than predicted, with a net profit of $664 million, or $1.52 a diluted share, up year on year from $659 million. CN's revenue rose 8 percent since 2011 during the third quarter to $2.5 billion on a 3 percent increase in carloads. Petroleum and chemical sales rose by 15 percent during the quarter.
Claude Mongeau, CN chief executive, said the railway would wait until the end of the December to give its forecast for 2013. "We don't know where the economy will be, and we will update you in January, but we are looking to make our own lunch and grow faster than [the] base market," he said.
Mongeau said there had been a slowdown toward the end of quarter that is expected to last through the year, even though the railroad is growing faster than the economy. Segments that are growing include crude shipments, the fracking oil and gas market, and coal volumes, which utilize the company's "super coal trains" that are twice the size of standard trains.
CN also said it had sealed a deal with a major unnamed retailer that some industry insiders say is Target.
For more of the Canada.com and the Globe and Mail stories: canada.com and theglobeandmail.com
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