"NEWS
CP Rail Profit, Revenue Fall
Thu Jan 21, 2016 10:37 AM CST
(Dow Jones) -- Canadian Pacific Railway Ltd. on Thursday reported a fourth-quarter profit that missed analyst expectations, as a drop in several key freight volumes amid challenging economic conditions hurt revenue.
Canada's second-biggest railway operator, based in Calgary, Alberta, earned 319 million Canadian dollars ($220 million), or C$2.08 a share, down from C$451 million, or C$2.63 a year earlier.
Adjusted earnings, which exclude items, came in at C$2.72 a share, below the C$2.78 a share analysts polled by Thomson Reuters were expecting.
Revenue fell just over 4% to C$1.69 billion, missing the C$1.72 billion analysts were expecting.
"Despite challenging economic conditions and lower commodity prices, we continue to focus on what we can control--lowering costs, creating efficiencies and improving service," said CP Chief Executive Hunter Harrison in a statement.
The railway, which has made a hostile bid to merge with Norfolk Southern Corp., said its operating expenses fell 4% to C$1.01 billion and its operating ratio was unchanged at 59.8%. Operating ratio is the percentage of operating revenue consumed by operating costs, so a decline would indicate an improvement.
CP said revenue in its forest-products sector grew the most in the period, increasing 20%, while revenue from Canadian grain and automotive shipments rose 11% and 9%, respectively. Revenue from the transport of metals, mineral and consumer products fell 21%, while crude revenue dropped 19%.
Railroad volumes have been on a declining trend over the past year amid sluggish economic growth and slumping commodity prices that have put a damper on rail shipments. Heavy, long-haul types of shipments such as grain, crude oil and fracking sand products are examples of soft rail volumes affecting all railroads, analysts say.
Freight shipments are likely to continue facing lower-than-normal volumes through the first quarter of the year as commodity markets stabilize.
CP guided for a 2016 operating ratio below 59%, double-digit earnings-per-share growth from 2015 levels and capital spending of about C$1.1 billion.
CP is in the midst of a hostile bid to merge with Norfolk Southern Corp. to create an industry giant that would stretch from the Canadian West Coast to the Gulf of Mexico and U.S. Atlantic seaboard. Norfolk Southern has repeatedly rebuffed CP, making it "reasonably likely" a proxy fight will occur, activist investor and Canadian Pacific shareholder William Ackman said last month.
CP's larger peer and main rival, Canadian National Railway Co., is scheduled to report fourth-quarter results next week.
NEWS
CP: Competitors Blocking Deal
Tue Jan 19, 2016 12:33 PM CST
(Dow Jones) -- Canadian Pacific Railway Ltd. on Tuesday stepped up efforts to win support for its hostile bid to merge with Norfolk Southern Corp., filing a complaint with the U.S. Department of Justice alleging some of its competitors were acting together to thwart the deal.
In a letter to Justice officials, the Calgary, Alberta-based railroad operator said recent public criticisms of its proposal by senior officials from CSX Corp. and Union Pacific Corp. marked "a concerted effort to block" the planned deal to protect their business, in violation of antitrust laws.
"The fact that these major railroads have joined to work so feverishly against CP's proposal speaks volumes about their concerns regarding the impact the transaction would have on their competitive positions," the letter said.
A spokesman for Union Pacific disputed the allegation. "We have communicated with other railroads for the purpose of petitioning the government. We oppose this merger, and we are prepared to discuss our views with the government," he said.
Spokespeople for Norfolk Southern and CSX declined to comment.
Since Canadian Pacific announced its cash-and-stock merger proposal for Norfolk Southern last November, its merger ambitions have been challenged by rapidly shrinking freight levels due in part to the commodity slump. The stocks of North America's seven Class 1 railways have swooned in the face of sharp declines in freight traffic. Canadian Pacific has weathered the worst drop, with its stock price down about 17% since the beginning of the year. Norfolk Southern's shares have fallen 15% in that time.
At midday Tuesday, CP was trading on the New York Stock Exchange at $106.45, up 2%. Norfolk Southern was trading at $71.90, up 0.2%.
CP, backed by one of its major shareholders, activist William Ackman, has said a merger with Norfolk Southern would create a more efficient rail network and reduce expensive traffic bottlenecks, particularly in the Chicago area.
Competitors, meanwhile, have complained the merger would limit competition and trigger price increases."
CP Rail Profit, Revenue Fall
Thu Jan 21, 2016 10:37 AM CST
(Dow Jones) -- Canadian Pacific Railway Ltd. on Thursday reported a fourth-quarter profit that missed analyst expectations, as a drop in several key freight volumes amid challenging economic conditions hurt revenue.
Canada's second-biggest railway operator, based in Calgary, Alberta, earned 319 million Canadian dollars ($220 million), or C$2.08 a share, down from C$451 million, or C$2.63 a year earlier.
Adjusted earnings, which exclude items, came in at C$2.72 a share, below the C$2.78 a share analysts polled by Thomson Reuters were expecting.
Revenue fell just over 4% to C$1.69 billion, missing the C$1.72 billion analysts were expecting.
"Despite challenging economic conditions and lower commodity prices, we continue to focus on what we can control--lowering costs, creating efficiencies and improving service," said CP Chief Executive Hunter Harrison in a statement.
The railway, which has made a hostile bid to merge with Norfolk Southern Corp., said its operating expenses fell 4% to C$1.01 billion and its operating ratio was unchanged at 59.8%. Operating ratio is the percentage of operating revenue consumed by operating costs, so a decline would indicate an improvement.
CP said revenue in its forest-products sector grew the most in the period, increasing 20%, while revenue from Canadian grain and automotive shipments rose 11% and 9%, respectively. Revenue from the transport of metals, mineral and consumer products fell 21%, while crude revenue dropped 19%.
Railroad volumes have been on a declining trend over the past year amid sluggish economic growth and slumping commodity prices that have put a damper on rail shipments. Heavy, long-haul types of shipments such as grain, crude oil and fracking sand products are examples of soft rail volumes affecting all railroads, analysts say.
Freight shipments are likely to continue facing lower-than-normal volumes through the first quarter of the year as commodity markets stabilize.
CP guided for a 2016 operating ratio below 59%, double-digit earnings-per-share growth from 2015 levels and capital spending of about C$1.1 billion.
CP is in the midst of a hostile bid to merge with Norfolk Southern Corp. to create an industry giant that would stretch from the Canadian West Coast to the Gulf of Mexico and U.S. Atlantic seaboard. Norfolk Southern has repeatedly rebuffed CP, making it "reasonably likely" a proxy fight will occur, activist investor and Canadian Pacific shareholder William Ackman said last month.
CP's larger peer and main rival, Canadian National Railway Co., is scheduled to report fourth-quarter results next week.
NEWS
CP: Competitors Blocking Deal
Tue Jan 19, 2016 12:33 PM CST
(Dow Jones) -- Canadian Pacific Railway Ltd. on Tuesday stepped up efforts to win support for its hostile bid to merge with Norfolk Southern Corp., filing a complaint with the U.S. Department of Justice alleging some of its competitors were acting together to thwart the deal.
In a letter to Justice officials, the Calgary, Alberta-based railroad operator said recent public criticisms of its proposal by senior officials from CSX Corp. and Union Pacific Corp. marked "a concerted effort to block" the planned deal to protect their business, in violation of antitrust laws.
"The fact that these major railroads have joined to work so feverishly against CP's proposal speaks volumes about their concerns regarding the impact the transaction would have on their competitive positions," the letter said.
A spokesman for Union Pacific disputed the allegation. "We have communicated with other railroads for the purpose of petitioning the government. We oppose this merger, and we are prepared to discuss our views with the government," he said.
Spokespeople for Norfolk Southern and CSX declined to comment.
Since Canadian Pacific announced its cash-and-stock merger proposal for Norfolk Southern last November, its merger ambitions have been challenged by rapidly shrinking freight levels due in part to the commodity slump. The stocks of North America's seven Class 1 railways have swooned in the face of sharp declines in freight traffic. Canadian Pacific has weathered the worst drop, with its stock price down about 17% since the beginning of the year. Norfolk Southern's shares have fallen 15% in that time.
At midday Tuesday, CP was trading on the New York Stock Exchange at $106.45, up 2%. Norfolk Southern was trading at $71.90, up 0.2%.
CP, backed by one of its major shareholders, activist William Ackman, has said a merger with Norfolk Southern would create a more efficient rail network and reduce expensive traffic bottlenecks, particularly in the Chicago area.
Competitors, meanwhile, have complained the merger would limit competition and trigger price increases."
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