CP expects winter woes to dent earnings

Canadian Pacific Railway (CP) is warning shareholders its first fiscal quarter will see profits slip on the “severity and length of winter events on our operations.”

The impact of recent weather events, combined with a “lag in fuel recoveries,” will have reduced diluted earnings per share (EPS) by about 40 cents compared to last year, the company said Monday.

CP now expects diluted EPS for its first quarter of 2011 in the range of 12 to 22 cents.

“Since the new year, multiple severe weather events have caused significant disruptions to train operations across our network,” CEO Fred Green said in a release.

“Slower train speeds have reduced productivity and asset velocity, thereby constraining network capacity and limiting our ability to meet market demands.”

For example, he said, “the impact of avalanche disruptions are just one factor that increased fivefold this year in our busiest corridor through the mountains, causing very inefficient stop-start operations.”

All that said, “with moderating weather, CP is seeing fluidity return to the network and our operating metrics are showing improvement. Our two- to four-year target of delivering a low-70s operating ratio remains unchanged.”

Meanwhile, Calgary-based CP has been “increasing resources to meet strong demand and improve service reliability,” Green said.

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