Despite showing strong revenues in the first financial quarter, Canadian Pacific Railway has lowered its outlook for 2020 as it faces fallout from the COVID-19 pandemic.
The company reported last month that its first quarter revenues were $2.04 billion, a 16 percent increase from $1.77 billion last year.
Even though CP said the figure breaks a previous record, it forecasts that revenue ton miles, which is calculated by multiplying a shipment’s weight in tons by the number of miles it is transported, will fall by mid-single digits.
It said the pandemic is having an impact on its operations and the economy.
Even with gains in grain, CP said it expects there will be a drop in crude oil and automotive shipments.
Keith Creel, president and chief executive officer of CP, told analysts and shareholders on a conference call that despite economic impacts caused by the pandemic, the company believes it will weather the storm.
“We certainly recognize that there are going to be challenging times ahead,” he said. “We’re not panicked, we’re not distracted; we’re prepared.”
CP set a first-quarter record for grain shipments over the past three months.
It moved more than 6.35 million tonnes, citing strong demand.
John Brooks, executive vice-president and chief marketing officer, told investors grain volumes were up eight percent in the first quarter, with revenues up by 10 percent.
He said the company’s 8,500-foot grain train operating model is enabling new capacity on existing train starts.
As well, he said, its investment in its covered hopper fleet gives customers the ability to load more grain per car.
“As I look ahead, grain will remain a bright spot,” Brooks said. “Our Canadian grain market share is approaching 54 percent. With strong demand at both Vancouver and Thunder Bay, I expect ongoing momentum.”
He said potash volumes were down 10 percent, with revenues having decreased by two percent. However, he said he remains optimistic about international and domestic demand for potash.
He said revenues were up by 21 percent in fertilizers and sulfur, with future demand expecting to be strong.
“I expect our grain, coal and fertilizer to provide a level of resiliency looking forward,” Brooks said.
Even though there was an increase in revenues, CP saw net income fall to $409 million in the first quarter. During the same period last year, it had a net income of $434 million.