Canadian Pacific Kansas City Ltd. CEO Keith Creel revealed that the company took a hit of around $200 million due to the ongoing tariff disputes initiated by the United States. Despite this setback, Creel expressed optimism amidst uncertainties surrounding the North American free trade agreement.
In a conference call with analysts, Creel highlighted the importance of renegotiating the United States-Mexico-Canada Agreement to benefit all three countries involved. He emphasized the significance of trade among the nations, acknowledging the need for potential adjustments to address trade imbalances.
Creel voiced hope for the renewal of the USMCA, noting that trilateral trade has significantly increased since the inception of the North American Free Trade Agreement in 1994. He speculated that the agreement could be renewed before the upcoming midterms, but acknowledged the challenges that may arise during the process.
Despite facing challenges, Canadian Pacific Kansas City Ltd. managed to slightly increase its revenue to $3.92 billion in the latest quarter. The company attributed this growth to enhanced operational efficiency and a rise in freight volumes, particularly driven by strong grain revenues. However, adverse weather conditions at the Port of Vancouver impacted some revenue gains.
Even with a revenue uptick, CPKC reported a 10% decrease in profits for the quarter, with net income dropping to $1.08 billion compared to the previous year. The railway industry has been under additional pressure due to Union Pacific Corp.’s proposed acquisition of Norfolk Southern Corp., which could lead to significant market consolidation and potential challenges for competition.
Creel expressed concerns about the merger’s impact on competition and market dynamics, warning of potential consequences for the rail transportation system in North America. The proposed merger is currently under review by the Surface Transportation Board, with speculation surrounding its approval under the current administration’s pro-business stance.
Canadian Pacific Kansas City Ltd. also announced a three percent increase in core adjusted diluted earnings per share, falling slightly below analysts’ expectations. The company projected volume growth and earnings increases for the coming years, along with a reduction in capital expenditures.
Additionally, CPKC disclosed a quarterly dividend of nearly 23 cents per share on outstanding common shares, scheduled for payment on April 27.