CP Rail made a profit of more than half a billion dollars last year, sharply higher than 1995 earnings despite a decline in freight revenues.
“Canadian Pacific Railway’s financial performance, achieved during a period of unprecedented internal change, was particularly satisfying,” said David O’Brien, president of CP Ltd., the parent company of CP Rail, in the company’s annual report. “The railway exceeded expectations by increasing operating income, before unusual items, by 39 percent.”
He said it was the result of cost-cutting measures which included shedding 1,700 employees and hundreds of kilometres of track.
Read Also
Canola oil transloading facility opens
DP World just opened its new canola oil transload facility at the Port of Vancouver. It can ship one million tonnes of the commodity per year.
Operating income for CP Rail last year was $530.8 million, based on revenues of $3.55 billion. The previous year, revenues were actually $40 million higher but the bottom line loss was $760 million because of more than $1.1 billion in restructuring costs charged against the railway.
Last year, CPR revenues from hauling grain fell slightly to $832 million.
Good words for government
While CP has been campaigning for weaker government regulation of the grain and rail industries to allow it to operate on a more commercial basis, the annual report did offer some praise of government deregulation efforts already enacted.
“Line rationalization, a key component of the railway’s cost-based turnaround, received a boost in July when the Canada Transportation Act came into force,” according to the report. “The act permits a more streamlined discontinuance process that treats the railway as a business and not a regulated monopoly.”
Overall, CP Ltd. recorded net income of $829 million, compared to a net loss of $823 million the previous year, when a number of extraordinary costs flowing from rationalization were charged to the company.
Shareholder dividends increased to 48 cents per share from 36 cents the previous year.
Last year, CP used revenues from the sell-off of its Marathon Realty properties to reduce the net debt by $1.5 billion.
O’Brien predicted CP Rail will have an even better year in 1997 as the cost benefits of fewer employees and continued efforts to shrink the rail system are felt on the cost side.
On the income side, freight revenue will grow in part because of a record grain harvest to be hauled.
