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Higher revenue boosts Canadian Pacific’s fourth-quarter profits

A Canadian Pacific train at a yard. (Photo:: Flickr/Jerry Huddleston)

Net profits for the fourth quarter of 2019 rose nearly 22% for Canadian Pacific (NYSE: CP) amid a quarterly record for overall revenue.

Fourth-quarter net income for 2019 totaled C$664 million, or C$4.82 diluted earnings/share, compared with C$545 million, or C$3.83 diluted earnings/share, in the fourth quarter of 2018. 

Source: Canadian Pacific

Total revenue rose 3% to nearly C$2.1 billion amid a 3% increase in freight revenue. Revenue gains for grain and for energy, chemicals and plastics lifted quarterly revenues. 

Operating expenses were also higher in the fourth quarter amid increased expenses for purchased services and labor compensation and benefits. Operating expenses totaled nearly $1.2 billion, a 4% increase from $1.1 billion in the fourth quarter of 2018.


“CP’s strong operational performance and commitment to controlling costs enabled the railway to be successful despite headwinds to our bulk franchise,” said CP President and CEO Keith Creel. “We continue to take a disciplined approach to sustainable, profitable growth — a plan rooted in the foundations of precision scheduled railroading.”

Source: Canadian Pacific

CP’s operating ratio (OR) rose slightly to 57% in the fourth quarter, compared with 56.5% for the same period in 2018. A lower OR percentage implies that a company is more profitable. OR is  operating expenses as a percentage of revenue.

Service metrics were mixed in the fourth quarter. Average terminal dwell, which is the amount of time a train spends at a terminal, fell 9% from 6.5 hours to 5.9 hours, but average train speed was roughly flat, at 22.4 miles per hour compared with 22.6 mph in the fourth quarter of 2018.

Source: Canadian Pacific
Canadian Pacific2019 Value2018 ValueY/Y Gross ChangeY/Y % Change
Freight revenue (millions)$2,024.0$1,964.0$60.03.1%
Carloads (000s)702710-8-1.1%
Revenue per carload$2,883$2,767$1164.2%
Intermodal shipments262263-1-0.5%
Intermodal revenue per carload$1,528$1,541-$13-0.8%
Gross ton miles (millions)71,495.072,786.0-1,291-1.8%
Revenue per tonmile$5.14$4.84$06.2%
Employee counts (average)12,86012,982-122-0.9%
Train velocity (mph)22.422.60-0.9%
Dwell time (hours)5.96.5-1-9.2%
OR%57.0%56.5%0.5%0.9%
EPS$4.82$3.83$0.9925.8%


Looking to 2020, CP expects high single-digit to low single-digit adjusted EPS, compared with 2019’s adjusted diluted EPS of $16.44. The railway also anticipates mid-single-digit volume growth, as measured in revenue ton miles, and capital expenditures of C$1.6 billion. 

“Our industry-leading CP family remains focused on safely harnessing our network capacity to provide unique solutions that leverage our network strengths and our superior service,” Creel said. “As we head into 2020 and beyond, I’m confident we’ll continue to see wins in the marketplace enabling us to continue to outpace the economy and our peers.”


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.