Canadian Pacific locomotives at work in the Calgary yard - 16 May 2007 Jeff McIntosh.

23 April 2012

Pershing Square Capital Management Fires Back After CP Reports Stronger Earnings

Toronto Ontario - Improved financial results at Canadian Pacific Railway Ltd. should not be confused with improved management, says the U.S. investment manager who is trying to replace the railway's chief executive.
 
In a letter to shareholders issued Monday, Pershing Square Capital Management chief Bill Ackman said the railway benefited from a mild winter and an improved economy, when it reported much improved first-quarter results last week.
 
"The relief from headwinds and the benefit of a tailwind should not be confounded with "successful execution", Ackman said.
 
Pershing Square, the railway's largest shareholder, is seeking to replace CP chief executive Fred Green with former Canadian National Railway Co. chief executive Hunter Harrison.
 
The New York-based firm, which Ackman runs, has put forth seven nominees to sit on CP's 15-member board, which will be elected at the company's annual meeting next month in Calgary.
 
"The board and Mr. Green attempt to divert shareholders' attention from the company's poor financial performance to improvements in non-GAAP, non-financial, operating metrics," Ackman said.
 
"These metrics are distorted by the material benefit of a record mild winter and the outsized capital and operating expenditures of the company's wasteful 2012 Winter Plan."
 
Last week, CP reported first-quarter results that were much improved compared with a year ago, helped in part to a milder winter and improved operations.
 
CP said Monday it is building on its significant momentum and continuing to improve its operations, which is resulting in improved financial results.
 
"When faced with incontrovertible proof of CP's strong operating and financial performance, Pershing Square continues to distort the record to distract shareholders from the fact that it has no plan and no ideas," CP said in response to Ackman's letter.
 
"CP is confident that the continued successful execution of the multi-year plan by the CP management team will help drive further financial improvement, further operating ratio improvement, and further shareholder value creation."
 
Ackman has said that CP's plan isn't the problem, but rather it has been the company's management ability to deliver on the plans.
 
Craig Wong.
 
Editor's Note:  Article abridged.