Canadian Pacific’s profit down 32% in 2nd quarter

Canadian Pacific’s profit down 32% in 2nd quarter

   Canadian Pacific Railroad, fresh from rejecting a private equity buyout offer, on Tuesday reported lower second quarter profit following a tax gain a year before.

   The railroad’s net income dropped 32 percent in the three-month period to C$256.7 million ($232 million), down from C$378.1 million in the 2006 second quarter, which included a tax benefit of C$176 million ($149.1 million) as a result of a decrease in Canadian federal and provincial income tax rates.

   CPR's quarterly operating income rose 9 percent to C$307.7 million ($278 million), compared with C$282.6 million in the second quarter 2006. Revenue improved 7.5 percent to C$1.21 billion ($1.1 billion), from C$1.13 billion.

   The company said the higher revenue in the quarter reflected “continuing, strong global demand” for bulk commodities as it posted double-digit growth in sulphur and fertilizers and coal. Grain revenue improved 9 percent with industrial and consumer products up 6 percent and intermodal up 3 percent. There was a 4 percent decrease in automotive revenue and forest products revenue was down 2 percent.

   For the year to date, CPR's net income decreased 21 percent to C$385.3 million ($348 million) while operating income improved 5 percent to C$573 billion ($484 million) and revenue increased 4 percent to C$2.33 billion ($2.1 billion).

   Looking forward, CPR anticipates revenue growth of 4 percent to 6 percent in 2007.