5 April 2005
CP Rail Shares Rise on
Deal to Ship Elk Valley Coal
A five-year deal
to haul coal for Elk Valley Coal Corp. is expected to boost Canadian Pacific Railway's profit by
between 55 and 60 cents a share this year.
CP Rail said Tuesday it will ship coal from Elk Valley's five mines in southeastern B.C. to ports in
the Vancouver area. From there, the coal will go to markets in Asia.
Terms of the shipping deal were not disclosed.
"We believe it's an excellent win-win situation for our customers, for the Canadian
coal industry, for the province of B.C. and obviously for ourselves," CP Rail chief executive Rob
Ritchie said Tuesday during a conference call.
"We're pleased that we can now get focused on working with our customers to move more product
into a market that's obviously hungry for metallurgical coal," he said.
Investors seemed pleased, as they pushed CP (TSX:CP) shares up $1.21 to $44.99 in
late-morning trading on the TSX.
With the new contract, CP raised its full-year earnings guidance to between $3.15 and
$3.25 a share, a increase of up to 43 percent over last year.
According to Thomson One Analytics, the consensus of 14 analysts is for CP Rail to earn a profit of
$2.81 a share in 2005. The estimates ranged from $2.57 to $3.14 a share.
CP and Elk Valley also agreed to end legal proceedings related to a previous contract dispute over
hauling coal from Elk Valley.
Fording Canadian Coal Trust owns 60 percent of Elk Valley Coal Corp., the world's second largest
exporter of metallurgical coal. Teck Cominco owns the other 40 percent of Elk Valley.
|
