Calgary Alberta - After burning through his last set of aggressive objectives about two years ahead of schedule, Hunter Harrison said Canadian Pacific Railway Ltd. needs a new five-year plan.
 
"There's a lot of runway left here," Mr. Harrison, CP's chief executive, said on a conference call Wednesday.
 
The pace of change implemented at the railway is a victory over Mr. Harrison's detractors, who said his plans for CP were unrealistic, and a vindication for Bill Ackman, whose Pershing Square Capital Management waged a messy battle to see Mr. Harrison instated as CEO nearly two years ago.
 
Mr. Harrison said because so many of those initial expectations have been met, or will be soon, that CP will deliver the new plan at an analysts' meeting tentatively slated for September in New York.
 
In the meantime, he said his management team has set an internal goal for themselves to unseat Mr. Harrison's former railway, Canadian National Railway Co., as the most efficient Class I railroad in 2014.
 
"I think that we've assembled now a team of railroaders that is second to none in the world," Mr. Harrison said.
 
He has built a team around him, and renewed the railway's focus on its operations, ripping up virtually every aspect of how CP does business, from exiting lower-margin business, to rerouting its trains, and increasing the length of its sidings, with the expressed goal of improving its profitability.
 
So far, the plan is working.
 
The company delivered record fourth quarter numbers Wednesday that capped a record year of earnings.
 
The company also said it expected revenue to grow a further 6 to 7 percent this year, and earnings per share to increase by more than 30 percent year over year.
 
The centerpiece of Mr. Harrison's agenda when he took over at CP was to get the railway's operating ratio, an important measure of the company's profitability measuring operating costs as a percentage of revenue, down to the 65 percent range on an annualized basis in 2016.
 
He said Wednesday he expected to achieve that goal this year, two years ahead of schedule, after delivering a record operating ratio of 65.9 percent in the fourth quarter of 2013, a 9 percent improvement year-over-year.
 
Despite the strong momentum, several analysts said they believed CP's estimates were conservative for 2014, in part because of the boost the railway is getting now that its pension plan is in positive territory and from the Canadian dollar.
 
The company said that every 1 cent decline in the value of the Canadian dollar, results in a $34-million boost in revenue, or roughly 5 cents a share.
 
"We believe CP's assumptions to be somewhat conservative and expect the company to beat its targets," said Cameron Doerksen, National Bank Financial analyst, who raised his price target to $169 a share, from $164, after the results.
 
Mr. Harrison didn't disagree that the company's estimates may be conservative (He also developed a bit of a reputation of under-promising and over-delivering while at the helm of CN).
 
"Do I expect to do better than 65 percent? Yes," Mr. Harrison said on the call.
 
But he said there were several uncertainties still out there that might derail that plan, including harsh winter weather experienced in recent weeks, the volatility of the Canadian dollar, and the uncertainty in the Chinese economy.
 
"I think there are a lot of moving parts right now that we don't have our hands wrapped around very good," he said.
 
Management is also in the middle of determining how it would return some of the record $530-million in free cash it generated in 2013 to shareholders, either through a share buyback or dividend hike.
 
He said he expected a decision on the matter by the end of the first quarter.
 
As Mr. Harrison turns his attention to the next five years, he said he expected there would also be some dramatic changes in the competitive landscape of the industry, including greater consolidation of the top tier railways.
 
"I do think there will be consolidation in the future," he said, acknowledging he might be on a bit of an island with this idea.
 
But he said given the capacity issues, pinch points, environmental concerns, and the fact that there won't be any more railways built, the consolidation is inevitable.
 
"I don't think we'll go another five or six years without some kind of consolidation," he said.

Scott Deveau.