(Adds CEO comment on possible collaboration with CSX)
By Allison Lampert
MONTREAL, April 19 Canadian Pacific Railway Ltd
reported a higher-than-expected quarterly profit
as it earned more from shipments of commodities such as grain
and coal, and the company expressed optimism that demand was
The results are the first under Chief Executive Keith Creel,
who officially took the reins in the middle of the quarter from
veteran railroad executive Hunter Harrison.
CP is expecting mid-single-digit RTM (revenue ton mile)
growth in the second quarter, supported by shipments of potash
and grain, as Canada's No. 2 railroad pushes more broadly to
attract new customers and boost profitable growth.
"You're going to see top-line growth in this company," Creel
told analysts on Wednesday.
Creel said he would hold open meetings with employees to
improve labor relations, but any efforts would not come at the
expense of efficiency gains won by Harrison, who boosted CP's
profitability and share price by cutting costs, including
"Some feathers have been ruffled," Creel said of relations
with employees during the last four years under Harrison. "So
part of my focus has been to reconnect with employees and also
to reconnect ... with our labor unions to ensure that the things
we maybe didn't get right in the past, that we can get right as
we go forward."
North American railroad operators have cut costs amid
pressure from volatile commodity prices that have crimped
Creel also suggested that there could be opportunities for
some type of collaboration "from an operational standpoint" with
U.S. railroad CSX Corp, which is now headed by Harrison,
to improve service and hand off cargo around the congested
CP's net income fell to C$431 million ($320 million), or
C$2.93 per share, in the first quarter ended March 31, from
C$540 million, or C$3.51 per share, a year earlier.
The year-ago quarter included a gain of C$181 million from
the conversion of the company's U.S. dollar-denominated debt.
Excluding items, CP earned C$2.50 per share, just beating
analysts' average estimate of C$2.49 per share, according to
Thomson Reuters I/B/E/S.
The Calgary-based company's total revenue inched up 0.8
percent to C$1.60 billion. Freight revenue, which comprises the
lion's shares of total revenue, rose nearly 1 percent to C$1.56
The company's operating ratio, which measures operating
costs as a percentage of revenue, improved to 58.1 percent from
58.9 percent a year earlier. The lower the ratio, the more
efficient the railroad becomes.
($1 = C$1.35)
(Additional reporting by Muvija M and Divya Grover in
Bengaluru; Editing by Sriraj Kalluvila, Lisa Shumaker and Bill