A profitable balance sheet last year has encouraged Canadian Pacific to spend money this year.
Spending and realigning CP into five core business areas have meant big changes for the century-old company that helped open Western Canada.
The most dramatic move happened last summer with the company’s head office move to Calgary from Montreal. More than 750 people were relocated and some offices were closed in other cities.
In his speech to shareholders May 6 in Calgary, president and chief executive officer David O’Brien said CP profits improved substantially.
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Net income was $829 million or $2.41 per share compared with a loss of $2.41 per share in 1995, said the annual report.
Operating income increased 34 percent and cash flow was up 24 percent. Net debt decreased from 40 to 28 percent, the lowest level in years, said O’Brien. The company sold off real estate which wiped $1.5 billion in debt from the balance sheet.
Major change is coming for the railways division.
The company is spending $1.8 billion between 1995-97 on improvements. This includes an expenditure of $700 million this year on new locomotives, infrastructure and information systems.
In 1996-97 4,180 kilometres of line were removed. They were either sold, leased or abandoned. There are 6,100 km of core lines.
Hurt by regulations
However, further improvements are hampered by government, O’Brien said.
“Our ability to succeed in this highly competitive marketplace is affected, for good or bad, by government policy.
“Our grain handling and distribution system is burdened with excessive regulations and competing directions among various grain industry stakeholders,” he said in his speech.
On the shipping side, CP has become the largest carrier of containers and the lowest cost operator on the North Atlantic.
The chain of 26 CP Hotels also had a good 1996. Profits have risen every year for the last three.
PanCanadian Petroleum had record revenues with cash flow totaling $1 billion. This has spurred a $1 billion investment program with most allocated for exploration and development of oil and gas reserves in Western Canada.
Fording Coal set record profits as well. Expansion programs at all three of the export coal mines in southeastern British Columbia increased production ability. The three mines produce 15 million tonnes of coal annually. This year Fording starts commercial operations in Mexico at the world’s largest wollastonite mine.
