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Grain handle down in CP’s ‘best-ever’ fourth quarter

Railway's full-year grain handle up two per cent

U.S. income tax reform and significant increases in non-grain traffic more than offset a dip in Canadian Pacific Railway’s grain handle in its fourth quarter of 2017.

Calgary-based CP on Thursday reported net income of $984 million on $1.713 billion in gross revenues in what it described as its “best-ever” fourth quarter, up from $384 million on $1.637 billion in the year-earlier period.

The railway’s full-year net income for 2017 hit $2.405 billion on $6.554 billion in revenues, up from $1.599 billion on $6.06 billion in 2016.

The railway’s fourth-quarter earnings per share (EPS) rose 159 per cent, to $6.77, due in part to income tax recovery of $527 million, “primarily as a result of U.S. tax reform net of Canadian provincial tax rate increases,” CP said.

CP in its Q4 ending Dec. 31 moved about 115,100 carloads of grain, down four per cent from the year-earlier period, while its revenue per carload of grain rose $31, to $3,690.

The railway’s full-year grain handle came in at 440,700 cars, up two per cent from 2016, with revenue per grain carload at $3,477, up $51.

CP has previously reported its Canadian and U.S. grain handles as separate business lines, but consolidated the two into a single “Grain” business line starting in its first quarter of 2017.

Carloads of fertilizers and sulphur in Q4 were up one per cent at 14,500, with revenue per carload of $4,118, down 10 per cent. Full-year fertilizers and sulphur carloads dropped three per cent to 57,700, for revenue per carload of $4,178, down 11 per cent.

Revenue per carload was down in all CP’s business lines other than grain and coal in Q4, but Q4 carloads rose significantly in several lines, including intermodal (261,300, up six per cent), energy, chemicals and plastics (75,500, up 16 per cent), metals, minerals and consumer products (64,200, up 27 per cent) and potash (34,500, up seven per cent).

CP also booked an improved operating ratio (OR) of 56.1 per cent for Q4 and a record 58.2 per cent for the full year. The OR, a ratio of operating expenses to net sales, is cited as a measure of a company’s relative efficiency in its business sector.

Describing CP’s Q4 as “a record by almost every measure,” CEO Keith Creel said Thursday the company expects revenue growth for 2018 “in the mid-single digits and adjusted diluted EPS growth to be in the low double-digits.”

CP’s main Canadian competitor, Canadian National Railway (CN), plans to release its fourth-quarter and year-end financial results on Tuesday afternoon (Jan. 23). — AGCanada.com Network

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