Tax benefit, strong Canadian dollar boost CP RailwayÆs 2nd-quarter profit by 206%
Canadian Pacific Railway posted a 206 percent rise in second quarter net income to C$377.5 million ($330.7 million) on Wednesday, thanks largely to a C$176 million ($154.2 million) income tax benefit and a C$41 million ($35.9 million) after-tax foreign exchange gain on its long-term debt.
CPR's net income in the second quarter 2005 was C$123.2 million.
CPR's second quarter 2006 operating income rose 4 percent to C$281.9 million ($246.9 million) from C$271.1 million in 2005. Total revenue increased 2 percent to C$1.13 billion ($989.8 million) from C$1.10 billion in the second quarter last year. Freight revenue improved 1.5 percent to C$1.08 billion ($946 million).
Second quarter revenue increased in four of CPR's seven business lines, led by a 19 percent increase in grain to C$206.4 million ($180.8 million); a 18.2 percent rise in industrial and consumer products revenue to C$150.3 million ($131.7 million); automotive revenue was up 12.5 percent to C$91.9 million ($80.5 million); and intermodal freight revenue climbed 9.4 percent to C$313 million ($274.2 million). Revenue from coal shipments slipped 27.8 percent to C$143.5 million ($125.7 million) with forest products down 12 percent to C$75.8 million ($66.4 million) and sulphur and fertilizers down 9.8 percent to C$105.5 million ($92.4 million).
CPR said that its average revenue per carload increased 4.3 percent to C$1,655 ($1,450). 'Higher freight rates drove up freight revenue in the majority of our business lines, including significant revenue increases in the grain, intermodal and industrial and consumer products business. However there was a considerable offsetting impact from lower volumes of coal and potash as our customers experienced a decline in demand in these markets,' CPR said in a statement.
'We responded quickly to the drop in volumes with focused initiatives which produced improved yield and reduced expenses. With the success of our balanced scheduled railroad and our recent network capacity investments, we are well positioned for the second half of the year when bulk volumes are expected to increase,' said Fred Green, CPR’s president and chief executive officer, in a statement.
For the year to date, the railway's net income leaped 140 percent to C$488.5 million ($428 million), compared to C$203.9 million after six months last year. Operating income was up 13.6 percent at C$511 million ($447.7 million) from C$449.8 million. Total revenues increased 5.7 percent to C$2.24 billion ($1.96 billion) while freight revenue improved 4.4 percent to C$2.15 billion ($1.88 billion).
CPR said it expects its revenue to increase in the range of 5 to 8 percent for the full year 2006.
