Canadian Pacific has revealed that first quarter earnings will be lower than expected due to the impact of winter weather across the entire rail supply chain.
The company highlighted that the severity and length of winter events combined with the lag in fuel recoveries have reduced diluted earnings per share (EPS) by approximately 40 cents versus last year. CP expects diluted EPS for first quarter 2011 to be within 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. Slower train speeds have reduced productivity and asset velocity thereby constraining network capacity and limiting our ability to meet market demands,” said Fred Green, President and Chief Executive Officer. “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.”
“We have been increasing resources to meet strong demand and improve service reliability,” Mr. Green added. “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.”