CP earnings decline 16% in Q2 2016

Calgary-based Class I railway Canadian Pacific posted a net income of $328 million Canadian (U.S. $251 million) in the second quarter of 2016 on revenues of C$1.45 billion.    Canadian Pacific Railway Limited saw its earnings drop 16 percent to $328 million Canadian (U.S. $251.5 million) in the second quarter of 2016 compared with the same 2015 period, according to the company’s latest financial statements.
   Net earnings per diluted share (EPS) fell 9 percent, from C$2.36 in Q2 2015 to C$2.15 per diluted share in Q2 2016, on revenues that slid 12 percent year-over-year to C$1.45 billion.
   CP reported an operating ratio of 62 percent for the second quarter, up 1.1 points from 60.9 percent the previous year.
   “Revenue challenges in the second quarter, as noted in our quarterly outlook release last month, included lower-than-anticipated bulk volumes, devastating wildfires in northern Alberta and a strengthening Canadian dollar,” current CP Chief Executive Officer E. Hunter Harrison said of the results. “Despite these challenges, our team of dedicated railroaders continues to perform and their hard work and focus on service, safety and controlling costs, positions CP well for the rest of the year.
   “Our business model provides the flexibility and capacity to take advantage of changing market conditions – as volumes increase, we are well-equipped and ready to respond accordingly,” he added.
   Harrison, however, won’t be continuing in the role of president and CEO much longer, the Calgary-based Class I railway announced in a separate release.
   CP has reached an agreement with current President and Chief Operating Officer Keith Creel to serve as the next CEO, effective July 1, 2017. Creel started with CP in 2013 and was named to the company’s board of directors in 2015.
   “Keith is a tremendous railroader who is more than ready to take the helm as our next CEO,” said Andrew F. Reardon, chairman of the board. “Since joining the company in 2013, Keith has continued to demonstrate to the CP Board and all of our stakeholders his considerable leadership abilities and capacity to lead this organization into the future.”
   “I have known and worked with Keith for more than 20 years,” said Harrison. “He is one of the strongest operating executives I have ever met in this business and I know he will do a fantastic job leading CP after my retirement.  I look forward to supporting him as we continue to transition over the next year.”
   The railway’s board also reached an agreement with Harrison that will see the 50-year railroad veteran stay with CP in an advisory role for three years following his retirement.
   “We are absolutely thrilled that Hunter has agreed to continue in a supporting advisory capacity after he retires at the end of June 2017,” said Reardon. “Having the greatest railroader in history available to the organization and the Board brings countless benefits. Hunter led the historic turnaround of the Company, and we are more than fortunate that he has agreed to continue his relationship with us for three-years post his retirement.”
   “I’ve demonstrated my trouble with retiring in the past, so being available to the Board and the organization after my official retirement is exciting,” added Harrison. “In four years we have gone from an industry laggard to an industry leader.  I look forward to assisting Keith, the executive team and the Board in any manner requested as they continue to write the CP story.”