Higher grain and fertilizer revenues per carload trumped “challenging winter conditions” as Canadian Pacific Railway booked its highest-ever first-quarter (Q1) gross in the period ending March 31.
Calgary-based CP on Wednesday reported a profit of $217 million on gross revenues of $1.495 billion in its latest Q1, up from $142 million on $1.34 billion in the year-earlier period.
The ledger includes a two per cent decrease in the company’s Q1 grain handle, at 108,000 cars, yet also logs a nine per cent increase in Q1 grain revenue at $314 million, translating to an 11 per cent increase in grain revenue per carload at $2,906.
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The railway’s fertilizers-and-sulphur business segment showed more clear-cut improvement, with carloads up 17 per cent at 49,000 and segment revenue up 21 per cent at $152 million, for freight revenue per carload of $3,067, up two per cent.
“CP delivered the best first-quarter results in its history despite challenging winter conditions,” CP CEO Hunter Harrison said in Wednesday’s release.
Harrison retired from CP’s Montreal rival Canadian National Railway (CN) at the end of 2009 and was installed in the summer of 2012 as CP’s new CEO, on the demands from a major activist shareholder, New York investment firm Pershing Square Capital Management.
“There remains a lot of work to do as we continue to make significant changes to our operating model,” he said Wednesday. “With a very strong start to the year and momentum quickly building, I am now even more confident that we are on pace toward the best year-end financial and operating performance in CP’s history.”
Both CP and CN booked higher Q1 grain revenue per carload despite lower Q1 grain handles compared to the year-earlier period. The higher grain revenue comes as a coalition of grain handlers and other shippers complained in March of the worst rail service they’ve seen in three years.
The shippers, who said rail service began to decline in January, now demand stricter terms in federal legislation meant to compel the railways to reach service level agreements with shippers.
CP on Wednesday reported its average train weight for the quarter at 7,209 tons, up 12 per cent; average train length of 6,298 feet, up nine per cent; and average train speed of 24.2 miles per hour, down four per cent.
Average train weight and average train length “benefited from increased workload and the successful execution of our operating plan,” the company said,”further enabled by (CP’s) siding extension strategy, which allowed for the operation of longer and heavier trains.”
The reduced average train speed was “primarily due to increased workload and higher bulk demand, which on average is heavier and slower.”
CP’s total workforce (full- and part-time plus contractors and consultants) at the end of the quarter was 16,108 people, down 15 per cent.
The company in December mapped out plans to cut about 4,500 employee and/or contractor positions between June 30, 2012 and 2016, through “job reductions, natural attrition and reducing the number of contractors.”
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CP’s 2012 grain handle down, grain revenue up, Jan. 29, 2013
