24 October 2006
CP Rail Says May Exceed its 2006 Profit Forecast
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CPR CEO Fred Green
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(Editor: There is NO entity named CP Rail. Journalists
persist in mis-naming the company whose correct name is Canadian Pacific Railway Ltd.)
Canadian Pacific Railway Ltd. says it will likely beat its earnings forecast for 2006, although the third-quarter profit it
posted on Tuesday was down from last year's exchange-boosted results.
CP Rail, Canada's second-largest railway, said its total revenue increased 4 percent in the third
quarter as higher shipments of grain and industrial products offset weaker coal traffic. It also said that changes to its train
scheduling system have cut crew costs.
"With the current trends it is possible we will exceed the top end of our earnings guidance by up to 10 (Canadian) cents,"
chief executive Fred Green told analysts in a conference call.
The company previously forecast earnings per share of $3.60 to $3.85 for 2006, excluding he impact of any foreign exchanges gains or
losses on its debt.
For the third quarter, ended 30 Sep 2006, CP Rail said it had net profit of $161.7 million, or $1.02 a share, down from
$203.6 million, or $1.27 a share, in the same quarter a year earlier.
Last year's results were boosted by a $65.4 million foreign exchange gain on long-term
debt.
Excluding special items, CP said profit for the quarter would have been $1.06 a share, up from 84 cents on the same basis.
Revenue was $1.15 billion, up from $1.10 billion.
Analysts surveyed by Reuters Estimates had expected earnings of between 90 cents and $1.05 a share, with a mean estimate of 97.9 cents
a share.
The railroad's operating ratio - a shipping industry measure of efficiency - was 74.2 percent, down 3.2 percentage points from last
year.
Canadian National Railway, the country's biggest railway, this week said its operating ratio in the third quarter was 57.4 percent.
CP's operating ratio for the year to date as been 76.2 percent, and Green said he believes it can still meet its goal of improving that
to 75 percent for the full year. CP has about 13,500 miles of track in Canada and the United States.
Coal revenue was off 25 percent in the quarter due both to CP's sale of its Latta subdivision in Indiana's coal fields and to slower
than expected shipments by its major Western Canadian customer, Elk Valley Coal.
CP said Elk Valley's export sales were hit by increased competition from Australian mines and that its steel mill customers are mixing
higher-priced hard coking coal with softer coals to reduce costs.
The railway declined to estimate coal volumes for 2007 because Fording Canadian Coal Trust, Elk Valley's majority owner, has not
publicly estimated next year's sales volumes.
In a separate conference call on Tuesday, Fording officials said they expect transportation costs to drop next year although they
declined to give details.
Canadian Pacific's shares were up $1.48 at $62.50 at midday on Tuesday on the Toronto Stock Exchange having climbed to $63.49 earlier
in the day. The stock is up more than 25 percent this year.
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