As part of its 2018 Investor Day, Canadian Pacific Railway Limited has reported preliminary third quarter results, updated its 2018 guidance and unveiled the next phase of its long-term strategy, focused on driving sustainable, profitable growth.
CP reports preliminary third quarter results
Revenues are estimated to grow by 19% to an all-time record high of approximately CAN$1.9 billion.
Operating ratio is expected to be sub-58.5%.
Reported diluted earnings per share (EPS) is expected to be approximately CAN$4.35 and adjusted diluted EPS is expected to be approximately CAN$4.10, the highest in the company's history.
CP raises full year guidance
Due to a record-setting third quarter and a strong outlook for the remainder of the year, CP is also raising its 2018 full year guidance. The Company now expects adjusted diluted EPS to grow in excess of 20%, increased from earlier guidance of low double digit growth.
CP outlines strategy for sustainable, profitable growth at 2018 Investor Day
At Investor Day, hosted at CP's Ogden campus in Calgary, President and Chief Executive Officer Keith Creel will outline for investors the company's multi-year strategy to deliver superior service and financial results.
"Simply put, we have rebuilt the engine at CP and are leveraging the strengths of our franchise to drive growth," Creel said. "Our continued success comes from our commitment to the precision scheduled railroading model, our deep bench of industry-leading railroaders, a disciplined approach to capital investment, network capacity and a focus on sustainable growth."
Financial targets for 2018 - 2020
Volume compound annual growth rate (CAGR) of mid-single digits, measured in Revenue Ton-Miles (RTMs).
Double digit CAGR in adjusted diluted EPS.
Continued margin improvement through cost control and operating leverage Capital expenditures of approximately CAN$1.6 billion/yr.
Creel said CP's growth strategy is built on its foundations, people and network strengths.
"Our family of nearly 13 000 CP railroaders is proud to safely and efficiently deliver for our customers, communities and the broader supply chain. We remain committed to the foundations of precision scheduled railroading – across all aspects of the company, and with the rigour the model demands for long-term success."
Key assumptions for 2018 - 2020 targets
Exchange rate of 1.30 CAN$/US$.
On-highway diesel price of US$3.20/ short gal.
Pension income consistent with 2018.
Annualised effective tax rate of approximately 25%, excluding discrete items such as foreign exchange gains or losses on US dollar-denominated debt and any effects of changes in tax rates.
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