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Grain revenue jumps in CP’s Q4

A jump in revenue from slightly higher grain traffic in the last three months of 2011 helped bolster a beleaguered Canadian Pacific Railway in its fourth fiscal quarter (Q4).

CP on Thursday booked net income of $221 million on total revenues of $1.408 billion for its quarter ending Dec. 31, up from $186 million on $1.294 billion in the year-earlier period.

During the quarter, Calgary-based CP moved about 121,000 carloads of grain, up three per cent from 118,000 in the year-earlier Q4 — but it posted total grain revenue of $323 million, up eight per cent from $299 million in the previous Q4, for revenue per carload of $2,669, compared to $2,534 a year earlier.

"During the fourth quarter we delivered record asset velocity, a direct link to better service, positioning us for a lower operating ratio," CP CEO Fred Green said in a release.

"We are aggressively executing on our multi-year plan, which is instrumental in creating long-term value for shareholders."

CP’s Q4 and year-end numbers come out as the railway is under pressure from one of its shareholders, New York investment firm Pershing Square Capital Management, to achieve substantial improvements in its operating ratios.

Pershing Square now aims to run its own slate of directors for possible election to CP’s board at the company’s annual shareholders’ meeting in May, and has said it plans to replace Green with retired Canadian National Railway (CN) CEO Hunter Harrison.

Year-end profit down

CP on Thursday posted a slightly lower profit for the full year, booking $570 million in net income on $5.177 billion in revenues, down from $651 million on $4.981 billion in fiscal 2010.

CP’s total revenues from grain traffic were down three per cent for the year at $1.1 billion, compared to $1.135 billion in fiscal 2010. Grain carloads were down four per cent at 450,000, for revenue per carload of $2,444, up one per cent.

The company saw slightly better numbers in its fertilizers and sulphur category, where it booked full-year revenue of $549 million, up 13 per cent from $475 million in 2010. Fertilizers and sulphur carloads rose 12 per cent to 199,000, for revenue per carload of $2,759, up three per cent.

Revenue per carload in the same category for Q4 alone was up just one per cent, at $2,771.

CP on Monday locked in a certain amount of fertilizer traffic for 2012 and beyond, as it announced a 10-year agreement to haul potash for Canpotex, the joint export arm of fertilizer firms PotashCorp, Mosaic and Agrium.

That agreement, starting July 1 this year, will see CP run "a large majority" of potash from the member companies’ mines in Saskatchewan to Canpotex’s main terminal in Vancouver.

CP, working with Union Pacific, will also handle all Canpotex shipments destined for U.S. port facilities at Portland, Ore.

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