Canadian Pacific Railway generated record revenues of $6.71 billion in 2015.
However, its fourth quarter performance fell short of expectations, hampered by sluggish North American demand for rail service and falling commodity prices.
The Calgary-based company reported adjusted earnings per share of $2.72 in the three months ending Dec. 31, 2015, slightly below analysts’ expectations of $2.76.
The company’s fourth quarter operating ratio, which is a key measurement of operational efficiency, was 59.8 percent, identical with the company’s record setting performance the previous year.
“Despite challenging economic conditions and lower commodity prices, we continue to focus on what we can control — lowering costs, creating efficiencies and improving service,” chief executive officer Hunter Harrison said in a prepared statement.
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“While the North American economy braces itself for more headwinds, we remain optimistic about the future and CP’s continued growth.”
For 2016, Harrison projected double digit earnings per share (EPS) growth and a full year operating ratio below 59 percent.
The fourth quarter of 2015 presented its share of challenges to the North American railway industry.
CP, which collects more than half of its annual revenue in U.S. dollars, benefitted from a weak Canadian loonie, but freight revenue was down in the fourth quarter and the economic outlook for 2016 is uncertain at best.
Fourth quarter 2015 freight revenues at CP were listed at $1.65 billion compared to $1.72 billion in the fourth quarter of 2014.
Net income for the quarter was $319 million, down from $451 million a year earlier.
On the expenditure side, fourth quarter fuel costs were down significantly at $166 million from $255 million in the fourth quarter of 2014.
Freight revenue was down in most areas, but income from Canadian grain was up 11 percent in the quarter, suggesting that increased grain shipments have helped the company weather revenue losses in other sectors.
Fourth quarter Canadian grain revenues were listed at $296 million, compared to $267 million a year earlier.
Fourth quarter freight revenues were also up in the fertilizer and sulfur segment (up 18 percent), forest products (up 20 percent) and automotive (up nine percent).
Revenues from crude oil were down 19 percent at $105 million.
Canadian National Railway is scheduled to report its quarterly and year end earnings Jan. 26.
Contact brian.cross@producer.com
