CALGARY -
Canadian Pacific Railway Ltd. (
TSX: T.CP,
Stock Forum) cut its growth outlook as it reported its second-quarter profit improved compared with a year ago, then dropped the bomb on employees when it announced job cuts.
President and chief operating officer Keith Creel says the company plans to slash 200 to 300 more jobs this year as business drops. The planned cuts would be on top of the roughly 700 jobs CP has eliminated in the past year.
The company's revenue in the second quarter ticked lower to $1.65 billion compared with $1.68 billion last year.
The railway says it earned $390 million or $2.36 per diluted share in the quarter that ended June 30, up from $371 million or $2.11 per diluted share a year ago.
CEO Hunter Harrison didn't participate in today's conference call with investors because he was recovering from a medical procedure, but in a statement he said CP is efficient and can respond to an evolving economy.
“Even in the face of this economic slowdown, CP's commitment to providing the best service at the lowest cost will continue to serve us well moving forward,” Harrison said.
On an adjusted basis, the railway says its earnings per share were up 16 per cent at $2.45, while its operating ratio - which tracks operating costs as a percentage of revenue - improved to 60.9 per cent.
In its outlook, the railway said it now expects revenue growth this year to be two to three per cent and 2015 annual adjusted diluted earnings per share to total $10 to $10.40. That compared with expectations in April for revenue growth of seven to eight per cent and adjusted earnings per share growth of 25 per cent or more.
CP maintained its expectation that its operating ratio would be below 62 per cent.
The railway also announced Tuesday that Andrew Reardon has been unanimously elected chairman of its board of directors. Reardon's election follows the resignation from the board of chairman Gary Colter and director Krystyna Hoeg.