Grain News


Canadian Pacific Reports 4Q Net Income of C$15 Million, Down From C$221 Million in 4Q 2012; And Full Year Net Income of C$484 Million

Date Posted: January 29, 2013

Calgary, Alberta—Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) announced Jan. 29 its fourth-quarter 2012 results.

CP’s diluted earnings per share, excluding significant items (*see Non-GAAP Measures below) comprised of labour restructuring and asset impairment charges was $1.28.

This compares favourably with fourth quarter of 2011 diluted earnings per share, exclusive of significant items of $1.11, an improvement of 15 per cent.

Reported diluted earnings per share for the fourth-quarter 2012, inclusive of significant items, was $0.08.

Reported diluted earnings per share in fourth-quarter 2011, inclusive of significant items, was $1.30.

Full CP Report

CP’s operating ratio, excluding significant items (*see Non-GAAP Measures below) was 74.8 per cent for fourth-quarter 2012, which compares favourably to 2011’s operating ratio of 78.5 per cent.

Reported operating ratio for fourth-quarter 2012, inclusive of significant items was 96.0 per cent.

“Canadian Pacific is moving forward on our transformational journey to become the most efficient railroad in North America,” said E. Hunter Harrison, President and Chief Executive Officer.

“This quarter, CP saw strong operating performance as we continued to implement significant changes to how we run the railroad.”

“Management made a number of hard decisions this quarter including booking several significant items.

"With these decisions now behind us, we anticipate record-setting financial and operational results starting in 2013,” added Harrison.

Fourth-Quarter Significant Items

Announced items that impacted reported fourth-quarter 2012 and 2011 earnings include:

2012:

• $53 million labour restructuring charge ($39 million after tax), which unfavourably impacted diluted earnings per share (“EPS”) by 22 cents

• $185 million impairment of Powder River Basin and other investment ($111 million after tax), which unfavourably impacted diluted EPS by 64 cents

• $80 million asset impairment of certain locomotives ($59 million after tax), which unfavourably impacted diluted EPS by 34 cents

2011:

• $6 million advisory fees related to shareholder matters, which unfavourably impacted diluted EPS by 3 cents

• $37 million income tax benefit, which favourably impacted diluted EPS in 2011 by 22 cents

Financial Expectations for Full Year 2013

• Revenue growth to be in the high single digits

• Operating ratio to be in the low 70s

• Diluted EPS to be up in excess of 40 per cent versus 2012’s diluted EPS, excluding significant items (*see Non-GAAP Measures below) of $4.34

Key Assumptions for Full Year 2013

• Average fuel cost per gallon of US$3.45 per U.S. gallon

• Tax rate in the range of 25 per cent to 27 per cent

• Canadian to U.S. exchange rate at par

Defined Benefit Pension Expense Assumptions

• Defined benefit pension expense in 2013 and 2014 in the range of $50 million to $60 million per year, increasing to be in the range of $90 million to $110 million in 2015 and 2016.

For more information, call 612-849-4717.

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