Calgary Alberta - "The strong demand environment for North American goods and commodities, coupled with our own unique growth initiatives and the promising upcoming Canadian grain crop, gives me confidence that we will continue to see momentum build into the back half of 2022 and beyond," Canadian Pacific (CP) President and CEO Keith Creel said during a second-quarter 2022 financial report.
 
After a "challenging" first quarter, he noted the Class I railroad saw a sequential improvement in operating ratio, over 1,000 basis points despite a fuel headwind, and in operating performance.
 
Among CP's second-quarter 2022 highlights:
 
- Revenues came in at $2.20 billion, up 7 percent from the same period in 2021 ($2.05 billion). Bulk was up 40 percent, according to CP, which reported there was a "continued record performance in U.S. grain", "improved crop conditions in Canadian grain," with current expectations for an "average-sized crop and fourth-quarter harvest", and "double-digit" Potash volume growth in second-half 2022. Merchandise was up 38 percent, and CP noted there was "continued strong demand in automotive as dealers replenish inventory levels." Intermodal was up 22 percent, and CP said it expects "double-digit volume growth" in the back half of 2022. Revenue ton-miles (RTMs) were down 2 percent and freight revenue per RTM was up 10 percent from the prior-year period, according to the Class I railroad.
 
- Operating ratio increased by 50 basis points to 60.6 percent from 60.1 percent in second-quarter 2021, CP said, adjusted (non-GAAP), it rose by 440 basis points to 59.7 percent from 55.3 percent last year.
 
- Diluted EPS was $0.82, a 56 percent decrease from the same point in 2021, the railroad reported, core adjusted diluted EPS (non-GAAP), "excluding significant items and Kansas City Southern (KCS) purchase accounting," was $0.95, an 8 percent decrease from last year.
 
- Net income was $765 million, down 39 percent from second-quarter 2021's $1.246 billion. Core adjusted income (non-GAAP) was $882 million, up 28 percent from $698 million last year.
 
2022 Outlook
 
Looking ahead, CP said it was "ready and resourced to move double-digit volume growth in the back half."
 
Additionally, the Surface Transportation Board's review of its proposed merger with KCS, creating Canadian Pacific Kansas City (CPKC), the first single-line rail network linking the U.S., Mexico, and Canada, was "on track" for a decision in first-quarter 2023, the railroad reported.
 
It added that the KCS and KCSM concession exclusivity 10 year extension to 2037, announced earlier this month, "provides long-term certainty for the proposed CPKC merger."
 
"Our proposed combination with KCS will connect customers to new markets, enhance competition in the U.S. rail network, and drive economic growth across North America," Creel said.
 
"As we continue to progress toward this historic combination, our excitement about the opportunities ahead with the combined companies continues to grow."
 
Author unknown.