29 January 2008
CP Railway Profit More Than Doubles as Tax Rates Fall
Canadian Pacific Railway Ltd., the country's
second-largest railroad, said fourth-quarter profit more than doubled on lower income-tax rates.
Net income rose to $342 million, or $2.21 a share, from $146 million, or 92 cents, a year earlier, the Calgary-based
company said today in a statement. Canadian income-tax rate changes added $146 million during the quarter, the company
said.
"Even with the impact of foreign exchange, we had revenue growth in some sectors, including industrial and consumer products,
intermodal, and automotive," Chief Executive Officer Fred Green said in the statement.
The results reflected Canadian Pacific's ability to overcome higher oil prices and a drop in demand for shipments of lumber and other
construction materials amid the deepest U.S. housing slump in 16 years. Sales at the unit moving that freight fell less than 1 percent
last quarter.
Per-share earnings, excluding foreign-exchange gains and losses on long-term debt and certain
other items, were $1.20, beating the $1.15 average of 18 analyst estimates compiled by Bloomberg.
Revenue was little changed at $1.19 billion. Canadian Pacific said it expects 2008 sales to be up as much as 6 percent, although the
North American economy is "uncertain." Full-year revenue rose 2.7 percent to $4.7 billion.
2008 Outlook
Earnings for 2008 will be $4.70 to $4.85 a share, excluding certain items, the company said. That compares with the
$4.81-a-share average of 15 analysts surveyed by Bloomberg.
Canadian Pacific rose $2.36, or 3.6 percent, to $67.26 at 4:10 p.m. in Toronto trading. The shares advanced 4.8 percent in the past
year.
Canadian Pacific benefited from a 5.6 percent slide in the Canadian dollar through year end since its all-time high on
31 Oct 2007. The decline gives the railroad a better exchange rate once U.S. revenue is converted to Canadian Pacific's
reporting currency. The U.S. accounts for about a fifth of total sales.
During the fourth quarter, Canadian Pacific had a foreign exchange gain on its long-term debt of $8 million, compared with
a year-earlier loss of $45 million.
Canadian Pacific ended the year with $378 million in cash and cash equivalents, more than three times the amount it held at year end in
2006.
Capital spending will be "essentially flat" this year at $885 million to $895 million, the railroad
said.
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