Strong financial results in the fourth quarter of 2017 contributed to another record-setting year at Canadian Pacific Railway.
CP reported fourth quarter revenues of more than $1.7 billion, up five percent from the previous year, and full-year 2017 revenues of $6.55 billion, up from $6.23 billion in 2016.
Full-year net income was listed at more than $2.4 billion, up from about $1.6 in 2016.
In a Jan. 18 conference call with investors, CP executives said momentum established in 2017 should translate into continued growth and opportunities in 2018.
CP, Canada’s second largest rail company, cited strong Canadian grain movement, more demand for rail service from crude, potash and coal shippers and improving economics as factors behind a strong fourth quarter that set records “by almost every measure.”
“We built up momentum through 2017, so looking forward, we’re carrying that momentum into 2018 and this company again is poised for another record-setting year,” said CP president and chief executive officer Keith Creel.
“In 2018, we’re targeting mid-single digit revenue growth and EPS (earnings per share) growth in the low double digits.”
John Brooks, CP’s chief marketing officer, said the railway earned record revenues from moving Canadian grain in the last three months of 2017.
“Canadian grain revenues grew six percent” year-over-year,” Brooks said.
“Despite derailments in November and tough weather conditions in December … our Canadian grain franchise … delivered record revenue.”
He said the Canadian grain crop came in slightly better than expected, at almost 71 million tonnes.
“This should provide more opportunities for grain movement as we move mid-year into 2018.”
Meanwhile, revenue generated from moving American grain were down 14 percent in the fourth quarter under tough market conditions.
CP projected continued strong demand from potash shippers, both domestically and to export markets in 2018, buoyed by increased production at a new K+S potash mine in Saskatchewan.
Demand from crude oil shippers is also showing continued strength, but the company said it would choose its partners carefully with an eye to sustained long-term demand.
CP ended the year with a workforce of 12,200 workers, up five percent from the previous year but unchanged since the second quarter of 2017.
Staffing levels are expected to remain relatively flat through 2018, despite projected growth in key sectors.
Nadeem Velani, the company’s chief financial officer, said CP is projecting capital expenditures in the range of $1.35 to $1.5 billion in 2018, pending future investment in grain hopper cars.
“The primary reason for the wide range in (capital expenditures) is due to the possibility of investing in upgrading our grain hopper fleet,” Velani said.
“We are awaiting the final outcome of Bill C-49 before making a final decision but that being said, if proposed changes are positive, the investment in a modernized grain hopper fleet would mean substantial benefits to both CP and our customers.”