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UPDATE 1-Canadian Pacific expects 12 pct drop in Q2 revenue

Published 2016-06-21, 08:56 a/m
© Reuters. UPDATE 1-Canadian Pacific expects 12 pct drop in Q2 revenue
CP
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June 21 (Reuters) - Canadian Pacific Railway Ltd CP.TO
said on Tuesday it expected second-quarter revenue to fall about
12 percent from a year earlier, hurt by weak commodity volumes,
the Fort McMurray wildfire in northern Alberta and a stronger
Canadian dollar.
The company said it expected adjusted earnings of about
C$2.00 per share. Canadian Pacific reported adjusted earnings of
C$2.45 per share in the second quarter of 2015.
The Fort McMurray wildfire sharply cut output from the
Alberta oil sands, and the company was forced to temporarily
halt services to the city.
Grain and potash volumes have also been weak.
However, CP said cost-cutting measures in the first half of
the year and an expected improvement in commodity volumes would
likely help the company meet its full-year guidance.
"While we acknowledge the environment remains challenging,
additional cost reduction opportunities and the potential for
stronger volumes in the back half of the year still lead us to
believe that achieving double-digit EPS growth in 2016 is a
possibility," Chief Executive Hunter Harrison said.
The Calgary-based company said it expected an operating
ratio of about 62 percent in the second quarter. CP reported an
operating ratio of 60.9 percent in the same quarter last year.
The operating ratio shows operating expenses as a percentage
of revenue. The lower the figure, the better the performance.
CP's operating ratio was a record low 58.9 percent in the
first quarter.
The company's U.S.-listed shares were down about 2.9 percent
at $123.75 in premarket trading.

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