Canadian Pacific Railway Ltd. missed expectations even though its profits surged 25 per cent during the winter quarter despite lower volumes caused by frigid temperatures and heavy snowfall.
“What happened to us in February, especially in the first two weeks of March, was extraordinary,’’ chief executive Keith Creel told investors on a conference call Tuesday.
Creel stressed “one of the toughest months and quarters in my railroading experience,’’ highlighting its lowest gross ton mileage — an industry metric measuring weight moved per mile — in eight years.
Chief financial officer Nadeem Velani said the railway’s momentum was interrupted as weather muted revenue growth and resulted in significant expenses.
Operating expenses rose nine per cent year over year to $1.22 billion in the quarter ended March 31, CP Rail said.
The operating ratio rose 180 basis points 69.3 per cent in an industry metric that where a lower ratio means more efficiency.
On an adjusted basis, year-over-year diluted earnings per share rose three per cent to $2.79 from $2.70 in the first quarter, far short of analyst expectations of $3.01, according to Thomson Reuters Eikon.
Marketing head John Brooks said rail network problems “hindered’’ grain volumes, though strong pricing allowed their revenues to ramp up.
Despite the weather trouble, the Calgary-based company saw profits jump last quarter as crude-by-rail revenues increased and fuel costs declined.
Net income rose 25 per cent to $434 million in the first quarter, compared to $348 million in the same period in 2018, CP Rail said.
Quarterly revenues jumped to $1.77 billion, up six per cent from $1.66 billion last year.
Revenues for energy, chemicals and plastics shot up 18 per cent to $315 million amid surging demand from Asian markets .
Grain revenues, which have broken company records recently, rose six per cent to $380 million, and container traffic and coal nudged up three per cent and four per cent to $380 million and $158 million, respectively.
The results were released after markets closed Tuesday.
Creel started the earnings call by acknowledging three rail workers who died after a freight train fell more than 60 metres from a bridge into the Kicking Horse River in Alberta on Feb. 4.
“There can never be a worse call than the one I received that morning to notify me of that tragic accident. It’s heartbreaking for the immediate family members obviously, as well as the CP family members that remain at work.’’