A Canadian Pacific freight train travels around Morant's Curve in the Rocky Mountains near Baker Creek, Alta., Friday, Dec. 3, 2021.Jeff McIntosh/The Canadian Press
Canadian Pacific Railway Ltd.’s profit fell by 33 per cent in the fourth quarter as costs rose owing to supply-chain snarls and the planned takeover of Kansas City Southern.
CP profit dropped to $532-million or 74 cents a share, from $802-million or $1.19 in the same period a year earlier. Revenue rose by 1 per cent to $2.04-billion.
For the full year, profit increased to $2.85-billion or $4.18 a share from $2.44-billion or $3.59 the previous year. Revenue climbed 4 per cent to $8-bilion.
Heavy rain and flooding washed out railways, roads and bridges in British Columbia in November, killing at least four people. Rail traffic into the Port of Vancouver was halted for several days.
“CP’s world-class railroaders relied on our strong operating model and commitment to controlling what we can control to safely deliver for customers and shareholders despite the unique challenges faced in the quarter,” Keith Creel, CP chief executive officer, said in a statement accompanying the financial results released after markets closed on Thursday.
CP is awaiting a regulatory review of its proposed US$27-billion takeover of Kansas City Southern, a deal that would create a much larger network running into the southern United States and Mexico. The proposal has received approval from shareholders of both companies, and could receive a final say from the U.S. Surface Transportation Board by the end of 2022, CP said.
“This quarter we also reached a crucial milestone in our journey to create the first single-line rail network linking the U.S., Mexico and Canada by combining with Kansas City Southern, which closed into voting trust Dec. 14,” Mr. Creel said.
CP offered less for KCS than did rival Canadian National Railway Co., but the U.S. regulator blocked the first step in CN’s deal. This cleared the way for CP, whose cheaper bid was accepted by KCS and is awaiting regulatory approval.
“Railroading is an outdoor sport, but I can tell you this quarter had some incredibly challenging conditions,” Mr. Creel told analysts on a conference call on Thursday. He described as “miraculous” CP crews’ abilities to repair and reopen the damaged B.C. railway in eight days.
On an adjusted basis, fourth-quarter earnings per share fell to 95 cents from $1.01 in the year-earlier period.
In the final three months of 2021, CP said grain and coal revenues fell by 13 per cent and 14 per cent, respectively. Automotive product revenue fell by 20 per cent. Revenue from shipping metals, minerals and consumer products rose by 25 per cent.
“The B.C outage certainly applied more pressure to our customers and our volumes,” said Nadeem Velani, CP’s finance chief.
CP’s financial results come two days after CN said it increased profit by 18 per cent in the fourth quarter to $1.2-billion or $1.69 a share.
For the full year, CN’s revenue rose by 5 per cent to $14.48-billion. Profit rose to $4.9-billion or $6.89 from $3.6-billion or $5 in the previous year.
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Eric Atkins