Canadian Pacific Railway Ltd on Thursday reported second-quarter results that were slightly ahead of expectations as the rail operator worked to recover from massive backlogs and an unusually harsh winter.
Canada’s second-largest rail operator said its net income soared 48 percent to $371 million, or $2.11 a share, up from $252 million, or $1.43 a share, a year earlier.
Revenue climbed 12 percent to $1.68 billion.
On average, analysts had expected earnings of $2.09 per share and revenue of $1.65 billion, according to Thomson Reuters I/B/E/S.
The company’s share price closed at $202.33, up $4.50 on the day.
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Operating income rose by 40 percent, to $587 million, and operating expenses edged up two percent to $1.09 billion.
Freight revenue from Canadian grain operations in the quarter rose to $252 million, up 32 percent from the same period last year.
The revenue from moving one ton of Canadian grain one mile slipped to 3.56 cents from 3.61 cents in the same period last year.
It’s U.S. grain operation saw freight revenue rise to $115 million, up 26 percent.
Revenue from moving one ton of U.S. grain one mile rose to 4.31 cents from 3.77 cents.
CP Rail and larger rival Canadian National Railway have come under significant pressure during the first half of the year to clear the backlog from a record grain harvest while dealing with service disruptions caused by severe winter weather.
Calgary-based CP Rail said its operating ratio improved by 680 basis points to 65.1 percent during the quarter, despite facing rail congestion around Chicago and other challenges.
Operating ratio is the percentage of revenue needed to maintain operations and is a key measure of railroad efficiency. The lower the number the better.
Chief executive officer Hunter Harrison, a rail veteran, has been orchestrating a major turnaround at CP, a former industry laggard, and had promised to squeeze the railway’s operating ratio to 65 percent by mid-2016. CP has been ahead of schedule and is now eyeing 63 percent for 2014.
