[271011.EN.LOG] CPR & CN Posts Net Profits Up

CALGARY-based Canadian Pacific Railway (CPR) recently announced its third quarter results, seeing net profits of C$186.6 million, a decrease of C$10.5 million year on year, while operating profit was C$324.6 million, down C$13.1 million year on year.

Total revenues in the third quarter were C$1.3 billion, up C$55.4 million compared to the same period last year, while operating expenses were C$1 billion, up C$68.5 million. Also, average fuel price raised 47 per cent to US$3.44 per US gallon.

Said president and CEO Fred Green: "We currently see strength in our bulk franchise, but remain vigilant in monitoring economic signals from Asia.

"We are focused on sustaining and improving service and productivity through investments in locomotives, infrastructure, people and technology."

THE Canadian National Railway (CN) recently announced its third quarter results, posting 19 per cent year-on-year increase in net profits to C$659 million (US$653.5 million), including an after-tax gain of C$38 million on the sale of IC RailMarine Terminal Company.

However, the adjusted net profits increased only 12 per cent to C$621 million year on year if the gain on the sale is excluded.

Operating profit grew 12 per cent to C$938 million, and its operating ratio was 59.3 per cent, a 1.4 percentage point better than the 60.7 per cent ratio in the same period of previous year.

Revenues for the third quarter rose 9 per cent to C$2,307 million, while carloadings grew 4 per cent and revenue ton-miles 6 per cent.

"The 9 per cent rise in third-quarter revenues was mainly attributable to higher freight volumes, due in part to modest improvements in North American and global economic conditions and in the company's performance above market conditions in various segments; the impact of a higher fuel surcharge, as a result of year-over-year increases in applicable fuel prices and higher volumes; and freight rate increases," said the company statement, adding that these factors were partly offset by the negative translation impact of the stronger Canadian dollar on US-dollar-denominated revenues.

Its revenues increased for metals and minerals by twenty-one per cent, intermodal twelve per cent, automotive 9 per cent), forest products 7 per cent, grain and fertilizers 6 per cent, petroleum and chemicals 6 per cent, and coal 1 per cent). Other revenues increased by 6 per cent.

Revenue ton-miles, measuring the relative weight and distance of rail freight transported by CN, rose 6 per cent year on year.

Rail freight revenue per revenue ton-mile, a measurement of yield defined as revenue earned on the movement of a ton of freight over one mile, rose 3 per cent year on year.

Operating expenses increased 6 per cent to C$1,369 million due to higher fuel costs, purchased services and material expense as well as depreciation and amortisation expense.

Likewise, the above factors were partially offset by the positive translation impact of the stronger Canadian dollar on US-dollar-denominated expenses, lower casualty and other expense, as well as a decline in labour and fringe benefits expense partly due to lower incentive compensation.

President and CEO Claude Mongeau said: "CN posted impressive third-quarter results, driven by record carloadings and revenues, strong operational execution, and rigorous cost control. The 4 per cent rise in carloadings and 9 per cent increase in revenues outpaced general economic activity during the quarter, reflecting CN's improved service and market positioning.

"All commodity groups posted revenue gains in the quarter, benefiting from modest growth in overall economic activity, as well as from CN's continued focus on supply chain collaboration and service innovation with its customers and transportation partners."

Looking ahead, despite a weaker-than-expected global economy, CN is still optimistic that it will generate double-digit diluted EPS (earnings per share) growth of up to 15 per cent in 2011, as well as a cash flow of C$1.2 billion for 2011 with an expected additional pension contribution of about C$350 million.

Source : HKSG, 27.10.11.