Two Canadian Pacific Railway locomotives - Date unknown Ryan Remiorz.

24 October 2012

Canadian Pacific Profit Up 20 Percent

Toronto Ontario - There was positive market reaction Wednesday to Canadian Pacific Railway's first full quarter under its new chief executive, former Canadian National CEO Hunter Harrison.
 
Canadian Pacific shares ran up $5.38, or 6.12 percent, to $93.27 in early afternoon trading after earlier reaching $93.91 after the Calgary-based railway's third-quarter profit beat analyst estimates.
 
It was a new high for the stock, according to records going back a decade.
 
The market run up followed CP's report that net income for the three months ended 30 Sept 2012 was $224 million, an increase of $37 million or 20 percent from the year earlier.
 
Its diluted earnings per share were $1.30, up 18 percent and revenue was up $110 million or eight percent to $1.5 billion.
 
The profit beat analyst estimates by a penny a share and revenue was slightly above the consensus estimate compiled by Thomson Reuters.
 
It's the first full quarter at CP for Harrison who was brought in by a major CP shareholder to reform Canadian Pacific, a company that traces its history back more than 120 years to the early years of Confederation.
 
Harrison was installed at the end of the second quarter after a hard-fought battle between Canadian Pacific's former board, led by former chairman John Cleghorn, and shareholders led by U.S. hedge fund manager Bill Ackman, who was dissatisfied with CP's performance under former CEO Fred Green.
 
Harrison said Wednesday his team has made significant progress in improving operations.
 
"Momentum is building at Canadian Pacific," Harrison said in a statement.
 
"We have implemented new services, closed terminals and certain yard operations, and we've put a new leadership team in place. The team has made significant progress on operational improvements, controlling costs, and on delivering results. And this is just the beginning."
 
The company's operating ratio, a closely watched measure of how much revenue is required to run the business, improved to 74.1 percent.
 
That's an improvement of 1.7 percentage points but still far from the levels that Harrison has targeted for Canadian Pacific, which has a rail system that spans Canada and the United States.
 
The results were slightly better than a consensus estimate compiled by Thomson Reuters. It called for $1.47 billion of revenue, $1.29 per share of net income, and $1.24 on adjusted earnings.
 
Author unknown.