Canada’s second largest railway company hauled home record profits last year and is showing no signs of slowing down.
Calgary-based Canadian Pacific Railway reported full-year revenues of $6.62 billion in 2014, up eight percent from $6.13 billion the previous year.
Operating expenses dropped to $4.28 billion from $4.71 billion a year earlier.
The company’s operating ratio, which is a key indicator of railway efficiency and profitability, fell to a record 64.7. A lower number reflects a higher level of efficiency.
Annualized earnings per share rose to a record $8.46, up 71 percent year-over-year.
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“CP’s remarkable transformation has allowed it to exceed its operational and financial goals for 2014, positioning the company to be nimble in the near-term and successful in the long run,” said chief executive officer Hunter Harrison.
The company’s outlook for 2015 is also upbeat, despite volatile commodity prices, particularly in the energy sector.
In a Jan. 22 conference call with investors, CP projected further revenue growth of seven to eight percent this year and an operating ratio below 62.
Key assumptions in the company’s 2015 outlook included a Canadian dollar valued at approximately US83 cents and crude oil shipments of 140,000 carloads.
Earlier estimates had pegged crude oil traffic at 200,000 carloads this year.
“CP fully recognizes the impact of short-term volatility in commodity prices, but given the diversity of its business and proven ability to control costs, we’re confident in our ability to execute on our plan going forward.”
In its Jan. 22 earnings report, CP reported a six percent increase in average train weight, a two percent increase in average train length and a two percent reduction in average train speed.
In a nutshell, the company moved more cars and more cargo per train but hauled at a slightly slower speed.
As usual, freight revenues from Canadian grain played prominently in CP’s revenue picture.
Adjusted freight revenue from Canadian grain was pegged at $988 million last year.
Grain business is expected to remain strong this year.
According to some industry observers, total supplies of Canadian grain and oilseeds in late 2014 were at their second-highest level ever, thanks to large carryouts from the 2013-14 crop year and an above average harvest in fall.
Canadian National Railway is scheduled to release it 2014 earnings Jan. 27.
brian.cross@producer.com
