CP projects 12% drop in Q2 revenues

The Calgary-based Class I railroad cited lower-than-anticipated bulk volumes, the devastating wildfires in northern Alberta and a strengthening Canadian dollar as the primary reasons for the downward revision in earnings expectations.    Canadian Pacific Railway Limited has lowered its financial outlook for the second quarter of 2016, the company said in a statement earlier today.
   CP now expects revenues to drop 12 percent compared with second quarter 2015, with diluted earnings per share around $2.00 Canadian per share and an operating ratio of about 62 percent.
   The Calgary-based Class I railroad cited lower-than-anticipated bulk volumes, the devastating wildfires in northern Alberta and a strengthening Canadian dollar as the primary reasons for the downward revision.
   CP reported record second quarter earnings of $390 million Canadian (U.S. $300 million) in 2015, a 5 percent increase from the same 2014 period. EPS grew 12 percent year-over-year in Q2 2015 to $2.36 Canadian per diluted share on revenues of $1.65 billion Canadian.
   “Given the transitory nature of these impacts, CP remains confident in its business model and believes actions taken in the first half of the year – coupled with an anticipated improvement in commodity volumes – provide a path for the company towards meeting its full-year guidance,” the company said.
   “CP will continue to focus on controlling costs in a difficult environment,” added CP CEO E. Hunter Harrison. “While we acknowledge the environment remains challenging, additional cost reduction opportunities and the potential for stronger volumes in the back half of the year still lead us to believe that achieving double-digit EPS growth in 2016 is a possibility.”