(Adds CEO comment, news of D&H sale and other details from event)
Oct 1 (Reuters) - Canadian Pacific Railway Ltd aims to boost its annual revenue to C$10 billion ($8.96 billion) in 2018 and more than double earnings per share over the next four years, Chief Executive Hunter Harrison said on Wednesday.
Harrison presented his new targets at an event for investors and analysts in New York on Wednesday. The speech marked a widely anticipated shift in focus from cost cutting to growth for Harrison, a veteran railroad executive who has overseen significant improvements at Canadian Pacific.
“It’s hard for me to comprehend what’s happened, and what’s taken place in such a relatively short period of time. It’s obviously been a nice run,” he said. “It’s far from over.”
With shares near all-time highs, CP is up against lofty expectations. Its stock slipped 4 percent to C$222.81 ahead of Wednesday’s presentation.
In a release put out before the event, the company said it was targeting cumulative cash flow before dividends of C$6 billion through 2018. The base year for the earnings growth target is 2014.
Harrison also revealed that CP is working on a deal to sell its Delaware & Hudson Railway unit. He said they have reached an agreement, but he could not yet reveal the buyer. Spokesman Martin Cej confirmed the talks, but could not comment further.
CP agreed to buy the bankrupt New England railroad in 1990. In 2012 the Canadian company said it was reviewing options for the line.
CP said its new targets assume annual capital spending of C$1.4 billion to C$1.6 billion. The railway said it would invest to extend sidings and improve terminals, and offer “premium service.”
Harrison, who earlier in his career turned CP rival Canadian National Railway into one of the industry’s most profitable and admired companies, took over CP in 2012 after activist fund Pershing Square Capital Management won a proxy fight to appoint him.
He vowed to improve CP’s operating ratio, a key efficiency measure. The ratio expresses operating expenses as a percentage of revenue, so lower numbers are better.
In the first quarter of 2012, before Harrison was appointed, CP’s operating ratio was 80.1 percent, while CN’s was 66.2 percent. He vowed to squeeze it to 65 percent by mid-2016, but the measure hit 65.1 percent in the second quarter of this year.
Harrison also forecast C$1 billion in cash flow before dividends by 2016. The company said it is on track to reach that target two years early as well.
He took a few minutes to poke fun at his doubters on Wednesday, reading out quotes from people who had questioned his ambitious targets during the proxy fight and early in the turnaround push, without naming names.
In 2013, CP’s total revenue was C$6.1 billion and its earnings were C$4.96 per share.
1 US dollar = 1.1162 Canadian dollar Reporting by Allison Martell; Editing by Chris Reese, Diane Craft and Richard Chang