• ITVI.USA
    15,666.880
    61.640
    0.4%
  • OTRI.USA
    23.130
    -0.050
    -0.2%
  • OTVI.USA
    15,670.150
    64.120
    0.4%
  • TLT.USA
    2.800
    0.010
    0.4%
  • TSTOPVRPM.ATLPHL
    3.390
    -0.060
    -1.7%
  • TSTOPVRPM.CHIATL
    2.840
    -0.080
    -2.7%
  • TSTOPVRPM.DALLAX
    1.510
    -0.070
    -4.4%
  • TSTOPVRPM.LAXDAL
    3.290
    0.080
    2.5%
  • TSTOPVRPM.PHLCHI
    1.980
    -0.060
    -2.9%
  • TSTOPVRPM.LAXSEA
    3.900
    0.100
    2.6%
  • WAIT.USA
    124.000
    -3.000
    -2.4%
  • ITVI.USA
    15,666.880
    61.640
    0.4%
  • OTRI.USA
    23.130
    -0.050
    -0.2%
  • OTVI.USA
    15,670.150
    64.120
    0.4%
  • TLT.USA
    2.800
    0.010
    0.4%
  • TSTOPVRPM.ATLPHL
    3.390
    -0.060
    -1.7%
  • TSTOPVRPM.CHIATL
    2.840
    -0.080
    -2.7%
  • TSTOPVRPM.DALLAX
    1.510
    -0.070
    -4.4%
  • TSTOPVRPM.LAXDAL
    3.290
    0.080
    2.5%
  • TSTOPVRPM.PHLCHI
    1.980
    -0.060
    -2.9%
  • TSTOPVRPM.LAXSEA
    3.900
    0.100
    2.6%
  • WAIT.USA
    124.000
    -3.000
    -2.4%
Company earningsNewsRail

Canadian Pacific Q4 operating ratio hits record low

Fourth-quarter net profit up 20.8% to CA$802 million

Canadian Pacific (NYSE: CP) reached a record low operating ratio (OR) in the fourth quarter of 2020: 53.9% compared with 57% in the fourth quarter of 2019.

Investors sometimes use OR to gauge the financial health of a company, with a lower OR implying improved financial health. OR is a company’s expenses as a percentage of revenue.

“With a foundation of strong operational performance and a commitment to controlling what we can, the team continues to deliver,” said CP President and CEO Keith Creel in a release. “Despite the continued COVID-19 impacts, volumes steadily improved over the second half of 2020 and we saw revenue ton mile growth in the fourth quarter.”

Fourth-quarter net income was CA$802 million, or $5.95 per diluted share, a 20.8% increase from $664 million, or $4.82 per diluted share, in the fourth quarter of 2019. All figures are in Canadian dollars, and 1 Canadian dollar equals about 79 cents in U.S. currency.

(Canadian Pacific)

Fourth-quarter revenues fell 3% to $2.01 billion, while operating expenses decreased 8% to $1.08 billion on a year-over-year basis.

Service metrics slipped in the fourth quarter, with train velocity down 2.2% to 21.9 mph and  dwell time up 13.6% to 6.7 hours.

Canadian Pacific2020 Value2019 ValueY/Y Gross ChangeY/Y % Change
Freight revenue (millions, in CAD)$1,968$2,024($56)-2.8%
Carloads, including intermodal (000s)728702263.7%
Revenue per carload (including intermodal)$2,704$2,883-$179-6.2%
Intermodal shipments279262176.6%
Intermodal revenue per carload$1,470$1,528-$58-3.8%
Gross ton miles (millions)71,97771,4954820.7%
Freight revenue per revenue ton mile$4.89$5.14$0-4.9%
Employee counts (average)12,02812,860-832-6.5%
Train velocity (mph)21.922.4-1-2.2%
Dwell time (hours)6.75.9113.6%
OR%53.9%57%-3.1%-5.4%
EPS$5.95$4.82$1.1323.4%

Looking ahead to 2021, CP expects “high single-digit volume growth,” as measured in revenue ton miles, and it is planning capital expenditures of $1.55 billion. 

“The uncertainty caused by the COVID-19 pandemic dramatically disrupted global supply chains,” Creel said. “By leveraging our unique growth opportunities and applying our precision scheduled railroading operating model, CP is continuing to lead the industry. The momentum we’ve created in the fourth quarter will continue into 2021.”

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Joanna Marsh

Joanna is a Washington, DC-based writer covering the freight railroad industry. She has worked for Argus Media as a contributing reporter for Argus Rail Business and as a market reporter for Argus Coal Daily.

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