Canadian Pacific Railway says fourth-quarter profits grow to $221 million The USA Times

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Tuesday, May 22, 2012

Canadian Pacific Railway says fourth-quarter profits grow to $221 million

(Canadian Pacific Railway locomotives work in the Calgary yard on May 16, 2007. THE CANADIAN PRESS/Jeff McIntosh)

CALGARY - Canadian Pacific Railway Ltd. (TSX:CP), under fire from a dissident investor who wants major changes at the company, said Thursday that efforts to boost efficiency helped improve its fourth-quarter profit by 19 per cent.

The Calgary-based railway said it earned $221 million, or $1.30 per share for the quarter ended Dec. 31, compared with a profit of $186 million a year ago, or $1.09 per share.

Revenue grew to $1.4 billion in the last three months of 2011, compared with $1.29 billion in the same period a year earlier. However, the company's operating expenses were also higher, rising $109 million to $1.1 billion.

"We begin 2012 with operating momentum, excellent service levels and a stronger, more resilient rail network," said president and CEO Fred Green in a release.

"We are aggressively executing on our multi-year plan, which is instrumental in creating long-term value for shareholders."

Canadian Pacific has been under fire from William Ackman and his firm Pershing Square Capital, the railway's largest shareholder, who want new members on the railway's board of directors and a new chief executive.

Ackman wants former Canadian National Railway Co. chief executive Hunter Harrison to take over at the helm at Canadian Pacific over the objections of CP's board of directors.

CN has also objected to Ackman's plan and said Harrison may have violated terms of non-compete agreements signed when he retired at the end of 2009.

RBC Capital Markets analyst Walter Spracklin said CP's results Thursday were weak, but didn't expect them to affect the stock price.

"Under normal conditions, we would consider these weaker than expected results to be put pressure on the stock - however we expect the shareholder activism to be the main driver of valuation in the near-term," Spracklin wrote in a note to clients.

Canadian Pacific shares were up 64 cents at $72.29 on the Toronto Stock Exchange on Thursday morning.

The company transports coal, fertilizer, grain, automobiles, consumer goods and other materials across its vast North American rail network. As such, the railway is often thought of as a bellwether for the state of the overall economy.