Canadian Pacific Railway earned a third-quarter profit of $195 million, up 14% from 2008, the railroad announced Tuesday. Diluted earnings per share were $1.16, an increase of 5% (All figures are in Canadian dollars.)
CP said foreign exchange gains and losses on long-term debt and other after-tax items, including the sale of two large properties, had an impact on earnings of $0.31. Excluding these items, adjusted diluted earnings per share were $0.85, handily beating the Wall Street consensus estimate of 78 cents.
“We delivered strong cost control and tight resource management this quarter while traffic volumes remained under pressure,” said Fred Green, President and CEO. “We are continuing to refine and optimize our business processes to further drive structural cost improvements. This increases our flexibility and positions us well to respond to changes in volumes as the economy begins to recover.”
Said Dahlman Rose & Co. Director-Equity Research and Railway Age Contributing Editor Jason Seidl, “Canadian Pacific has demonstrated an ability to keep costs down and improve operating efficiencies. While it seems unlikely that a significant upturn in volumes will follow the ongoing stabilization in the near term, CP is well positioned to further improve its bottom line results by continuing its cost control and service enhancement strategies.”
CP said that in the third quarter and the first nine months of 2009, the results of the Dakota, Minnesota & Eastern are consolidated with CP’s results; however, for the same periods in 2008 DM&E earnings were reported as equity income on one line of the income statement. In order to aid in the evaluation of the underlying earnings trends, 2008 results have also been presented on a pro forma basis, which is a non-GAAP measure. Financial data presented on a pro forma basis, redistributes DM&E’s operating results from an equity income basis of accounting to a line-by-line consolidation of DM&E revenues and expenses.