CP Rail Profit Rises 33%, Buoyed by
Published: October 29, 2007
Canadian Pacific Railway Ltd. said
third-quarter profit rose 33 percent, buoyed by foreign-exchange gains
on its long-term debt. The carrier said 2007 earnings would be at the
``lower end'' of its forecast.
Net income increased to C$218.6 million ($229.1 million), or C$1.41 a
share, from C$163.8 million, or C$1.04, a year earlier, the
Calgary-based company said today in a statement. That beat analysts'
estimates. Sales climbed 3.2 percent to C$1.19 billion.
``We see ongoing challenges with the strengthening Canadian dollar and
fuel-price pressures,'' Chief Financial Officer Mike Lambert said in the
statement. Canada's second-largest railroad said it expects 2007
adjusted per-share earnings at the ``lower end'' of its forecast of
$4.30 to $4.45 and for revenue growth to be ``just below'' its target of
4 percent to 6 percent.
The worst U.S. housing slump in 16 years damped deliveries of lumber and
other forestry products, hurting Canadian Pacific and larger rival
Canadian National Railway Co. Canadian Pacific said revenue from those
shipments fell 21 percent.
A surging Canadian dollar that today hit a 47-year high against the U.S.
currency also has cut the value of revenue from the U.S., which accounts
for about a fifth of the railroad's total. At the same time, gains by
the Canadian currency helped Canadian Pacific to cover its debt
Foreign-exchange gains on long-term debt jumped to $43 million after tax
compared with a loss of $6 million a year earlier, Canadian Pacific
Profit per share exceeded the C$1.18 average of 17 analyst estimates
compiled by Bloomberg. Canadian Pacific rose 65 cents to $C67.25 at 4:10
p.m. in Toronto Stock Exchange trading before the results were
Canadian Pacific also said it is taking a $15 million after- tax charge
to account for a readjustment of its investments in Canadian
asset-backed commercial paper. The carrier, which had commercial-paper
investments with an ``original cost'' of $144 million as of Sept. 30,
2007, didn't say where it bought those investments.
Canada's C$34 billion market for commercial paper sold by non-bank
dealers ground to a halt after Coventree Inc. and other dealers failed
to renew most of their maturing debt because investors feared possible
ties to U.S. subprime mortgages.
``Uncertainties'' in the credit market also could cut the value of the
carrier's investments in commercial paper, ``which would impact the
company's earnings,'' Canadian Pacific said.