CALGARY: Canadian Pacific Railway (CP) has reported record third quarter profits of C$400 million – up 26 percent over the same period last year.
Revenue rose nine percent to C$1.67 billion to produce an operating profit of C$621 million, also a record. Revenue per carload increased seven percent overall for the quarter as crude oil transport rose 68 percent followed by domestic intermodal at 18 percent.
For the first nine months of 2014 net income was C$1.025 billion, an increase of 29 percent year-on-year. Freight revenue rose eight percent to C$4.7 billion for the period from C$4.4 billion - primarily due to higher Canadian grain and crude volumes.
The company says it expects to grow revenues to C$10 billion by 2018 and generate C$6 billion in cash flow between 2015 and 2018.
"The CP team delivered another quarter of impressive results," commented E. Hunter Harrison, CP's CEO. "Despite recent volatility in commodity prices, we are confident in the strength of the franchise and are on track to finish the year with CP's strongest quarter to date."
The results follow a decision by CP not to pursue exploratory talks with CSX Corporation about "a possible business combination".
The company said it had approached CSX with a proposal for an integrated coast-to-coast combination that would improve customer service, promote competition, alleviate congestion in North America - specifically the key Chicago gateway – and generate significant shareholder value.
"Such a business combination would offer creative alternatives for shippers, greater fluidity, increased capacity and improved efficiency industry-wide," it said.
Without saying why the talks were stopped CP noted that "given the right structure between the right players, and having thoughtful considerations and remedies to address shipper concerns", approval for the CSX combination would have been possible.
"The North American rail industry is confronted today with the challenges of moving more freight than ever and the prospect of moving even more as oil production, crop yields and consumer demand grow alongside the economy. CP is convinced that the significant problems that beset the industry now will only worsen over time if solutions aren't put in place immediately. A pro-competition, customer-friendly, safety-focused railway combination is one such solution that could not be ignored on its merits by regulators," the railway company said.