Canada’s two major railways both booked higher revenue per carload of grain and fertilizers for their third fiscal quarters, toward improved bottom lines at both Canadian National (CN) and Canadian Pacific Railway (CPR).
CPR on Wednesday reported grain revenue of $296 million in its quarter ending Sept. 30, up $6 million from the year-earlier period, citing its freight rate hikes, more long-haul U.S. exports to Asian markets due to an early harvest, and foreign exchange rates in the company’s favour.
CPR’s revenue from its sulphur and fertilizers traffic was down $26 million, at $111 million, over the same period, due mainly to "lower export potash shipments reflecting weaker market demand and lower overall volumes of sulphur traffic due to longer than expected customer outages on our lines."
The increased grain revenue, CPR said, "was partially offset by lower Canadian originating traffic volumes due to low carryout stocks from the prior crop year."
CPR’s grain carloads for the quarter were down six per cent for the quarter at about 110,000, while fertilizers and sulphur carloads were down 21 per cent at 38,000 — for revenue per carload of $2,691 (up nine per cent) and $2,921 (up two per cent) in those market segments respectively.
CN, meanwhile, booked revenue of $368 million in its grain and fertilizers segment for the same quarter, up 10 per cent from the year-earlier period.
Generally, CN said in its Q3 release on Tuesday, its increased revenues came from "higher freight volumes, due in part to growth in North American and Asian economies and the company’s performance above market conditions in a number of segments," along with freight rate hikes and favourable forex rates.
The company moved about 144,000 carloads of grain and fertilizers during the third quarter, a seven per cent increase over the year-earlier period, for revenue per carload of $2,556, up three per cent.
CN’s overall profit for the third quarter came in at $664 million on $2.497 billion in revenues, up from $659 million on $2.307 billion in the year-earlier period. CPR netted $224 million on $1.451 billion in revenues in the same Q3, up from $187 million on $1.341 billion in the same quarter last year.
CP noted its year-to-date 2012 ledger also reflects improved operating conditions compared to "the residual impacts of flooding conditions in 2011" — but those were partly offset this year by a nine-day work stoppage when its engineers and conductors walked out on strike in May. The federal government legislated them back to work shortly afterward.
"We have implemented new services; closed terminals and certain yard operations; and we’ve put a new leadership team in place," CPR’s new CEO Hunter Harrison said in the company’s release Wednesday. "The team has made significant progress on operational improvements, controlling costs and on delivering results. And this is just the beginning."
"Through our agenda of supply chain collaboration, CN expects to increase revenues slightly faster than general growth in the North American economy and to accommodate this growth at low incremental cost," CN CEO Claude Mongeau said Tuesday.
CN noted Tuesday that it hasn’t yet booked $18 million in restricted stock unit (RSU) payouts to Harrison, which the company’s board cancelled in February after deciding its former CEO was "likely in breach" of non-compete and non-disclosure conditions in his contract after going to work for CPR.
Harrison, who had recently retired from CN, became CPR’s CEO this summer as per the demands of one of the company’s major shareholders, New York investment firm Pershing Square Capital Management.
Pending the outcome of court proceedings against Harrison, CN also noted it hasn’t yet booked a gain of about $21 million in payouts it’s cancelled from Harrison’s retirement plan, which included a $1.5 million annual retirement benefit.
CP’s CEO quits ahead of reckoning, May 18, 2012
Grain freight cost index hiked for pensions, capital costs, May 1, 2012