Cost Cuts & Expansion Lift CP’s Profit

Article Excerpt

CANADIAN PACIFIC RAILWAY LTD. $64 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 155.5 million; Market cap: $10.0 billion; SI Rating: Above average) is starting to enjoy the benefits of a recent expansion of its network in Western Canada. In the three months ended December 31, 2006, profits grew 7.5%, to $1.15 a share from $1.07 a year earlier. These figures exclude unusual items and foreign exchange losses. Revenue rose just 1.7%, to $1.19 billion from $1.17 billion, as lower coal shipments offset higher grain and fertilizer volumes. The company is also doing a good job of cutting its costs. Its operating ratio (regular operating expenses divided by revenue — the lower, the better) fell to 73.1% in the latest quarter from 73.9% a year earlier. A plan to increase locomotive speed and cut waiting times in rail yards should help improve CP’s efficiency in 2007. The recent weakening in the Canadian dollar should also help raise…

You are trying to access subscriber-only content.

To read this article, you may subscribe or sign in.
If you are already a subscriber, log in here.

If you wish to become a subscriber, click here. Or you may enjoy access to all our publications when you become a Member of Pat McKeough's Inner Circle Pro.