Fuel costs, soft economy derail CPR earnings in Q2
A soft North American economy and rising fuel prices led Canadian Pacific Railway Ltd. to cut its earnings outlook for the year on Tuesday.
The profit warning came as CPR said its second-quarter profit dropped 40 per cent.
CPR told investors it made $155 million, or $1 a share, in the period, down from $257 million, or $1.64 a share, a year earlier.
The railway said its total revenues were "essentially flat" at $1.22 billion. Revenue from shipping of industrial and consumer products grew by 17 per cent, intermodal transport revenue was up nine per cent and coal was up six per cent.
However, forest product revenues tumbled 21 per cent, while grain revenue dropped nine per cent, sulphur and fertilizer revenue was off five per cent, and automotive revenue slipped two per cent.
The company said its operating expenses increased seven per cent, with fuel up 34 per cent.
"This was a tough quarter with the unprecedented rise in fuel prices, the North American economic downturn and prolonged flooding on our U.S. mainline," said Fred Green, the company's president and CEO. "Combined, these had a significant impact on CP's earnings."
In light of the current situation, CPR said its full-year adjusted diluted earnings are now expected to be in the range of $4.00 to $4.20 a share, down from its previous guidance of $4.40 to $4.60.
Investors sent shares of CPR down $2.42 to $64.21 on the TSX.
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