12 December 2005
CPR Responds to Fording Coal Trust Announcement on Production Levels
Canadian Pacific Railway said today that Fording Canadian Coal Trust's announcement on
7 Dec 2005, of lower anticipated coal production next year combined with recent developments in non-coal
shipper markets and accelerated cost reduction programs support updating its previously announced earnings guidance range for 2006.
CPR said lower than anticipated production of coal, combined with a softening in the automotive market would have a negative impact on
its earnings in 2006. However, CPR expects to experience higher than anticipated volumes in grain and continued strength in the
intermodal and merchandise markets. As well, the company is ahead of its expense reduction objectives including savings from an
administrative staff reorganization and reduction now under way.
As a result of these market developments and internal cost reduction measures, CPR said earnings per share guidance in 2006 would be
adjusted to be in the range of $3.60 to $3.85 cents per share compared to its announced $3.70 to $3.85 range. In the event that Elk
Valley Coal's production declines the full extent to 24 million tonnes in 2006, CPR has indicated earnings per share would be at the
lower end of the updated range.
The railway serves all of the mines in southeastern British Columbia owned by Elk Valley Coal Partnership (EVC), in which Fording has
a 60 percent interest.
Fording has attributed the decline in production to a significant global shortage of tires for trucks used to haul coal at mines.
"EVC is experiencing a short-term supply issue which we believe does not alter the strong medium-to-long
term fundamentals for metallurgical coal in world markets", said Fred Green, President and Chief Operating Officer of
CPR.
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