Hunter Harrison, retiring president and CEO of the Calgary-based Class I railway, has apparently decided to cut his remaining time with the company short, and may be eyeing U.S. railroad CSX as his next move.
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Canadian Pacific Railway grew earnings 18.3 percent in 2016 despite lower volumes and revenues
Canadian Pacific Railway Ltd. grew its earnings 18.3 percent to $1.6 billion Canadian (U.S. $1.2 billion) for the full year in 2016 compared with 2015 despite lower volumes and revenues, according to the company’s latest financial statements.
Net earnings per diluted share (EPS) jumped 26.5 percent, from C$8.40 in 2015 to C$10.63 per diluted share in 2016, on revenues that slid 6.7 percent year-over-year to C$6.23 billion.
CP reported an operating ratio of 58.6 percent for the full year, down 1.4 percentage points from the previous year and a record low for the company.
Volumes at the railroad slipped 4 percent from the previous year to 2.5 million carloads. The volumes decline was led by crude oil shipments, down 58 percent year-over-year; metals, minerals and consumer products, down 10 percent; and coal and potash, both down 6 percent from 2015 levels.
Those declines were offset, however, by increases in shipments of forest products, up 6 percent; chemicals and plastics, up 4 percent; U.S. grain, up 3 percent; and domestic intermodal, also up 3 percent.
“With continued margin improvement and an anticipated increase in volumes, led by a stronger bulk outlook, we expect adjusted diluted EPS growth to be in the high single-digits,” CP President and Chief Operating Officer Keith Creel said of the results. “With our strong leadership team, plus the commitment and discipline shown by the thousands of men and women every day at CP, the franchise is well positioned for 2017 and beyond.”
Meanwhile, retiring President and CEO Hunter Harrison has apparently decided to cut his remaining time with the company short, and may already be eyeing his next move.
CP said last quarter that Harrison, who took over CP at a time when it was the worst performing Class I in North America and is widely credited for its dramatic turnaround, would retire and be replaced by Creel, effective July 1, 2017.
In a statement yesterday, however, the railway said Harrison was taking vacation leave effective immediately that would last until Jan. 31, at which point he would be leaving the company officially.
According to a report in the Wall Street Journal, Harrison is hitting the road (or rather, the rails) early in order to team up with activist investor Paul Hilal and pursue a similar position with CSX Corp., the largest Class I on the U.S. East Coast. Hilal previously worked at billionaire Bill Ackman’s Pershing Square Capital Management before starting his own investment firm.
Ackman won a proxy fight to install Harrison as CEO at CP in 2012 following Pershing Square’s acquisition of a 14.2 percent stake in the company, but his firm announced plans to sell its shares in August 2016.
By leaving the company ahead of schedule, Harrison will forfeit benefits, pension funds, and much of his vested and unvested equity awards with a total value of C$118 million, according to CP.
CSX, which yesterday reported a 13 percent year-over-year decline in earnings for 2016, has declined to comment on the reports.