CP Rail sees profit drop
Published: October 28th 2008
Source: Jamie Sturgeon, Financial Post with
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Pacific Railway Ltd. said Tuesday currency fluctuations, high fuel costs
and bad asset-backed securities investments drove down earnings in the
CP said net income was $173-million ($1.11 a share), down from
$219-million ($1.41) in the year-earlier quarter, "primarily due to
foreign exchange impacts on long-term debt" and "charges associated with
the revaluation of an investment in asset-backed commercial paper [ABCP]."
Excluding those two one-time items, diluted earnings still declined 2%,
the company said. The results are a penny shy per share of analysts'
Costs also weighed on the bottom line, climbing 11% to $962-million,
with the price of fuel "the single largest driver," increasing fuel
expenses by 49% in the quarter ended Sept. 30, CP said in a news
Canadian Pacific, which has operations in both Canada and the northern
United States, said it had revenues of $1.26-billion in the quarter, up
from $1.19-billion a year ago.
CP said it had a foreign exchange loss on long-term debt of $3-million
(a gain of $6-million after tax) in the quarter, compared with a foreign
exchange gain on long-term debt of $64-million ($43-million after tax)
in the third quarter of 2007.
CP also said it adjusted the estimated fair value of an ABCP investment
and took a charge of $22-million ($15-million after tax) and classified
the investments as long-term.
The railway said its operating ratio, a transportation industry measure
of efficiency, was 76%, compared to 72.9% a year ago.