Strike hits CP Rail's bottom line
CALGARY - Canadian Pacific Railway Ltd. (CP.TO) says service interruptions related to labour negotiations and strike notices caused its net income to decrease 10 per cent in the second quarter despite higher revenues.
The rail service experienced two labour disruptions during its second-quarter that created some inconvenience, additional cost and slowed momentum, said CP Rail CEO Keith Creel during a conference call with analysts Wednesday. The labour issues also curtailed revenue, he said.
“What has been a headwind, I think, and I'm confident and optimistic, will become a tailwind, creating some labour stability,” said Creel.
The Calgary-based railway earned $436 million for the quarter, compared with $480 million for the same period a year earlier. That translated into $3.04 per diluted share for the period ended June 30, down from $3.27 per share in the second quarter of 2017.
Excluding one-time items, adjusted earnings rose to $453 million or $3.16 per diluted share, from $407 million or $2.77 per share a year earlier.
Revenues grew 6.5 per cent to $1.75 billion from $1.64 billion.
The railway's operating ratio, which measures its efficiency, worsened and rose to 64.2 per cent from 62.8 per cent.
CP Rail said its revenue ton-miles increased four per cent and its carloads two per cent.
The railway was expected to earn $3.12 per diluted share in adjusted earnings on $1.73 billion of revenues, according to analysts polled by Thomson Reuters Eikon.
The company also said it moved about 20,000 carloads of crude in the quarter or roughly 60 trains a month. It believes it can grow that number during its third quarter.