Net income totaled C$635 million (US$473 million), or C$4.66 in diluted earnings per share, in the second quarter of 2020, compared with C$724 million, or C$5.17 in diluted earnings per share, in the second quarter of 2019.
“The CP family of railroaders has achieved these results during some of the most challenging conditions the world has experienced in recent memory,” said CP President and CEO Keith Creel. “Our second-quarter results showcase the resiliency of our people and of the precision scheduled railroading (PSR) operating model. The COVID-19 pandemic has created immense challenges, but CP has risen to the occasion, adapted and responded to the benefit of our customers, communities and shareholders. The pride I feel each day coming to work with this team has never been stronger.”
As with its Class I counterparts, the coronavirus pandemic caused lower rail volumes and a drop in revenue compared to a year ago. Second-quarter revenue was nearly C$1.8 billion, compared with nearly C$2 billion for the same period in 2019.
But costs were also lower, with second-quarter operating expenses totalling C$1 billion versus C$1.16 billion in the second quarter of 2019. Among the cuts in operating costs was a 44% decline in fuel expenses to C$131 million.
Meanwhile, the railroad’s operating ratio was 57% in the second quarter, compared with 58.4% a year ago. Operating ratio, which is a company’s expenses as a percentage of its revenue, is a financial metric that some investors use to gauge the financial health of a company. A lower operating ratio can imply improved financial performance.
“While economic uncertainty remains, we’re controlling what we can control – our costs,” Creel saidl. “Our strong bulk franchise, which included record movements for Canadian grain and potash in the first half of the year, helped to offset some of the declines we experienced in other lines of business.”
Creel continued, “Given our strong cost control measures, industry-leading execution of the PSR model, and improved clarity on the volume environment, we now expect positive adjusted diluted EPS [earnings per share] growth for the year.”
Terminal dwell and train speed were relatively flat in the second quarter. Train speed was 22.4 miles per hour, same as a year ago, while terminal dwell, which is the amount of time a train is at a terminal, ticked up to 6.5 hours compared with 6.4 hours a year ago.
But trains were heavier and longer in the second quarter compared to a year ago. Average train length grew 8% to 8,089 feet, while average train weight for non-local traffic rose 7% to 9,984 tons.