Canadian Pacific Railway increased net income to $123 million in the second quarter of 2005, compared with net income of $84 million in second-quarter 2004. Diluted earnings per share increased 45 per cent to $0.77 in the three-month period ended June 30, 2005, compared with $0.53 in the same period of 2004.
SUMMARY OF 2nd QUARTER 2005 COMPARED WITH 2nd QUARTER 2004
- Operating ratio of 75.5 per cent, an improvement of 2.5 percentage points
- Excluding foreign exchange losses on long-term debt, diluted earnings per share up 34% to $0.87
- Revenue up 10 per cent to $1,106 million
- Operating expenses up less than 2 per cent, excluding significantly higher fuel costs
Rob Ritchie, President and Chief Executive Officer of CPR, said: "CPR employees know what our company has committed to deliver and they are bringing it home. They grew our business with a focus on quality revenue. They demonstrated the power of our integrated operating plan, maintaining fluidity from coast to coast while handling more workload in the second quarter than in any other quarter ever. They worked more safely, making substantial improvements in both train operations and personal safety.
"Even more remarkable is that these achievements were accomplished with major track capacity expansion work in full force between the Canadian Prairies and the Vancouver gateway, our busiest corridor.
"The fluidity across our network is generating greater operating efficiency, which is driving more of our growth to the bottom line," Mr. Ritchie said.
CPR's quality revenue strategy continued to deliver results as resources were focused on growing higher-yield traffic. Revenue per carload increased 14 per cent, driven by success in upgrading CPR's book of business, strong pricing and contract renewal programs supported by an environment of improving service.
Revenue in the second quarter of 2005 grew in five of CPR's seven business lines, led by increases of 48 per cent in coal, 10 per cent in intermodal freight and 7 per cent in grain. Most of the expense increase was due to high fuel prices. CPR's fuel expense increased by 35 per cent in the second quarter of 2005, compared with the same period of 2004. More than three-quarters of the increase in fuel prices was recovered through CPR's revenue fuel surcharge mechanism, as well as hedging and fuel efficiency measures.
SUMMARY OF 1st HALF 2005 COMPARED WITH 1st HALF 2004
- Net income up $97 million to $204 million and diluted earnings per share up 90 per cent to $1.27
- Operating ratio improved by 3.4 percentage points to 78.8 per cent
- Excluding foreign exchange losses on long-term debt, income up $83 million to $225 million and diluted earnings per share up 57 per cent to $1.40
- Revenue up 12 per cent, with double-digit increases in coal, grain and industrial products
- Operating expenses up 7 per cent, with most of the increase due to higher fuel costs
2005 OUTLOOK
CPR expects to grow revenue in the range of 12 per cent to 14 per cent in 2005. Diluted earnings per share, excluding foreign exchange gains and losses on long-term debt and other specified items, are expected to be in the range of $3.15 to $3.25, assuming oil prices averaging US$55 per barrel and an average exchange rate of $1.23 per U.S. dollar (US$0.81) for the full year.
A $160-million program to expand capacity by four trains a day, or more than 400 freight cars daily, between the Canadian Prairies and the Vancouver gateway is on schedule to be completed in the fourth quarter of 2005.