12 December 2005
CPR Cuts 2006 Earnings Outlook
Canadian Pacific Rail foreman John Edwards (L) and Scott Bailey
survey the rails
they are replacing west of Cochrane at sunset 6 Apr 2004.
A slowdown in coal production at one of its customers prompted Canadian Pacific Railway to reduce
its 2006 profit forecast on Monday.
CP (TSX:CP) said it expects to make a profit of between $3.60 and $3.85 a share. The company's previous earnings outlook called for a
range of $3.70 to $3.85 a share.
The railway said that lower than anticipated coal production, as laid out by Fording Canadian Coal Trust last week, combined with
softer conditions in the vehicle market will push earnings down next year. In the event that the Elk Valley coal project's output
declines to 24 million tonnes next year, CP said its earnings will likely come in at the lower end of its new earnings range.
CP said it serves all of the coalmines in southern British Columbia owned by Elk Valley Coal Partnership, in which Fording has a 60
percent stake.
Fording has pinned the production decline on a shortage of tires for the trucks used to haul coal at its mines.
While coal shipments are projected to fall, CP said it expects to see higher-than-anticipated grain shipments and strength
in the rail-to-truck and merchandise segments. The company said it is ahead of its cost-cutting target in its
administrative staff reduction.
CP shares fell 73 cents to close at $47.79 on the TSX.
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