Canadian Pacific Q3 Profit Up 23%, But Revenues Miss View

(RTTNews) - Canada's second-largest railroad operator Canadian Pacific Railway Ltd. (CP, CP.TO) on Tuesday reported a 23 percent increase in profit for the third quarter from last year, reflecting growth in freight revenue on higher grain and crude oil shipments. However, revenue for the quarter missed analysts' expectations.

The Calgary, Canada-based company's net income for the third quarter was C$400 million or C$2.31 per share, up from C$324 million or C$1.84 per share in the prior-year quarter.

On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of C$2.37 per share for the quarter. Analysts' estimates typically exclude one-time items.

Canadian Pacific's revenues for the quarter grew 9 percent to C$1.67 billion from C$1.53 billion in the same quarter last year, but missed analysts' consensus revenue estimate of C$1.69 billion.

Revenues from freight services rose 9 percent from the prior-year period to C$1.63 billion, while other revenues increased 5 percent from last year to C$41 million.

Canadian grain freight revenues for the quarter grew 17 percent from last year to C$248 million, while U.S. grain freight revenues increased 19 percent to C$127 million.

Crude oil revenues grew 74 percent to C$136 million and chemicals and plastics shipments revenue increased 13 percent to C$160 million.

Canadian Pacific's total revenue ton-miles or RTMs for the quarter grew 8 percent from the year-ago period to 37.55 billion, while total freight revenue per RTM increased 1 percent from last year to 4.34 cents.

Total carloads for the quarter increased 2 percent from the year-ago quarter to 687,000, while total freight revenue per carload grew 7 percent to $2,372.

Operating income for the quarter increased 19 percent from the year-ago period to C$621 million, while total operating expenses rose 4 percent to C$1.05 billion. Operating ratio for the quarter improved 310 basis points from last year to 62.8 percent.

On Monday, Canadian Pacific said that exploratory conversations held by it with U.S. railroad operator CSX Corp. (CSX) about a possible business combination have ended and no further talks are planned.

Earlier in October, the Wall Street Journal reported that Canadian Pacific approached CSX Corp about merging the two railroad operators. The potential hurdle to a deal could be regulatory opposition from the U.S. Surface Transportation Board.

CP is trading at $196.77, up $0.34 or 0.17 percent on a volume of 249,795 shares.

On the Toronto stock exchange, CP.TO is trading at $216.76, down $4.89 or 2.21 percent on a volume of 26,967 shares.