Canadian Pacific Kansas City reported a 16% increase in third-quarter core adjusted earnings per share Wednesday, as higher freight volumes and growth in grain and intermodal revenue helped offset rising fuel costs.
Revenue rose to C$4.22 billion ($3.01 billion) in the three months ended Sept. 30 from $2.61 billion a year earlier, the Calgary-based company (NYSE: CP) said in earnings released after the close of markets. Core adjusted diluted earnings increased to 91 cents per share from 78 cents, while reported diluted earnings rose 3% to 74 cents from 72 cents. Freight volumes, measured in revenue ton-miles, increased 6%.
“CPKC delivered solid results, powered by momentum across our unrivaled North American network, countering macroeconomic headwinds during the quarter,” President and Chief Executive Keith Creel said in the release. “The railroad is running very well, our service remains strong, and we continue to deliver growth across key markets, including grain, intermodal and merchandise.”
Grain revenue climbed to $644 million from $500 million in the third quarter of 2025, while intermodal revenue increased to $581 million from $476 million. Revenue from energy, chemicals and plastics rose to $544 million from $499 million, and automotive revenue reached $266 million, up from $244 million. Coal revenue was nearly unchanged at $181 million.
The gains lifted operating income to $1.06 billion from $955 million, although expenses increased faster than revenue. Fuel expense rose to $475 million from $296 million, while compensation and benefits increased to $507 million from $441 million.
CPKC’s operating ratio —operating expenses as a percentage of revenue and a key efficiency indicator— worsened to 64.8% from 63.5%. Its core adjusted operating ratio increased to 61.9% from 60.7%. The company said higher fuel prices added 1.7 percentage points to the reported ratio and 1.9 percentage points to the core adjusted figure.
Despite higher operating income, net income attributable to controlling shareholders edged down to $653 million from $655 million. Reported earnings per share nevertheless increased as the weighted-average diluted share count fell to 877.6 million from 911.4 million.
Income tax expense increased to $319 million from $211 million. The quarter included a $67 million tax charge related to Canadian tax reassessments associated with the Kansas City Southern acquisition in 2023, along with a $12 million expense from a Mexican tax settlement.
The company also disclosed $12 million in advisory costs related to its analysis and advocacy concerning the U.S. Surface Transportation Board’s review of the proposed Union Pacific (NYSE: UNP)–Norfolk Southern (NYSE: NSC) merger.
Cash generated by operating activities increased to $1.10 billion from $905 million a year earlier. Spending on additions to properties declined to $437 million from $613 million, while cash used to purchase common shares totaled $1.02 billion.
Creel said disciplined execution and a “robust commercial pipeline” supported the company’s confidence in meeting its annual commitments.
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