31 January 2010

Grain CPR's Only Growth Sector in 2009

The sun sets on a string of grain carrying Trudeau hoppers.

Grain was the only commodity to show an increase in traffic on Canadian Pacific Railway's (CPR) track in its books for 2009 compared to the previous year.
 
Calgary-based CPR on Thursday reported full-year net income of $612.4 million on $4.303 billion in revenues in 2009, up from $607.2 million on $4.932 billion in 2008.
 
In its fourth quarter (Q4) ending 31 Dec 2009, CPR logged $194.1 million in net income on $1.122 billion in revenue, up from $188.1 million on $1.3 billion in the year-earlier period.
 
To better evaluate trends in earnings, the railway restated its 2008 results on a pro forma basis to take into account the results of the Dakota, Minnesota, and Eastern Railroad (DM&E), which for Q4 and full-year 2009 are now "fully consolidated" with CPR's results.
 
"Markets remain uncertain and we will continue to drive efficiency while delivering a reliable service," CPR CEO Fred Green said in Thursday's release. "We are positioned with assets and resources to respond to changes in our customers' demand."
 
Freight revenues dropped in 2009 from pro-forma 2008 levels across almost all CPR's commodity sectors, including the sulphur and fertilizers sector, down 41.5 percent at $303.5 million. Grain revenue, however, rose 5.5 percent to $1.13 billion.
 
Grain carloads in 2009 reached 469,500, up two percent from pro-forma 2008 levels. Freight revenue per carload rose 3.5 percent to $2,407.
 
Fourth Quarter Down
 
CPR's Q4, however, showed a dip in revenue from all sectors, with grain carloads at 121,100, down 1.9 percent from the year-earlier period; grain revenue at $291.9 million, down 8.8 percent; and grain revenue per carload at $2,410, down seven percent.
 
Q4 revenues from sulphur and fertilizer traffic, by comparison, dropped 29.7 percent to $83.7 million, with carloads down 21.6 percent at 31,900. Only the coal and automotive sectors showed a Q4 increase in carloads, while only the intermodal sector showed increased Q4 revenue per carload, up just $1 at $1,213.
 
Overall, CPR said Thursday, its train miles have decreased in response to reduced volumes. Management has reduced CPR's train starts by consolidating and running longer, heavier trains, which also decreased overall train miles, the company said.
 
In its Q4, CPR recorded a $38 million after-tax charge on the early termination of a shortline railway contract. Earlier in 2009, CPR reported after-tax gains of $69 million on the sale of a partnership interest, and $68 million on the sale of Windsor Station in Montreal, plus gains from a land sale in Western Canada.