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CP reports record-low 2Q20 operating ratio

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Dry Bulk,

Canadian Pacific Railway Ltd has recently announced its 2Q20 results, including revenues of CAN$1.79 billion, diluted earnings per share (EPS) of CAN$4.66, adjusted diluted EPS of CAN$4.07 and an operating ratio of 57%.

"The CP family of railroaders has achieved these results during some of the most challenging conditions the world has experienced in recent memory," said Keith Creel, CP President and CEO. "Our second-quarter results showcase the resiliency of our people and of the precision scheduled railroading (PSR) operating model. The COVID-19 pandemic has created immense challenges, but CP has risen to the occasion, adapted and responded to the benefit of our customers, communities and shareholders. The pride I feel each day coming to work with this team has never been stronger."

Second-quarter highlights

  • Revenues decreased by 9% to CAN$1.79 billion from CAN$1.98 billion in 2019.
  • Reported diluted EPS of CAN$4.66, a 10% decrease from CAN$5.17 in 2019, and adjusted diluted EPS of CAN$4.07, a 5% decrease from CAN$4.30 in 2019.
  • Operating ratio was a second-quarter record of 57%, a 140 basis point improvement over 2Q19’s operating ratio of 58.4%.

"While economic uncertainty remains, we're controlling what we can control – our costs," said Creel. "Our strong bulk franchise, which included record movements for Canadian grain and potash in the first half of the year, helped to offset some of the declines we experienced in other lines of business. Given our strong cost control measures, industry-leading execution of the PSR model and improved clarity on the volume environment, we now expect positive adjusted diluted EPS growth for the year. As a result of the continued strength of our balance sheet, we have also restarted our share repurchase programme."

Additionally, CP recently announced it was increasing the quarterly dividend payable to shareholders to CAN$0.95 per share on the company’s outstanding common shares, an increase of approximately 15% to the previous quarterly dividend of CAN$0.83 per share, and marking the fifth consecutive year the company has increased its quarterly dividend. The announcement continues the path toward meeting CP's stated goal of achieving a 25% adjusted dividend payout ratio.

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