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18 January 2017
CP Reports Low Operating Ratio Amid Challenging Conditions


Calgary Alberta - Canadian Pacific Railway Limited (CP) today announced its lowest-ever fourth-quarter operating ratio of 56.2 percent and a record-low full-year of 58.6 percent as focussed cost control helped offset softer than expected volumes.
 
Fourth-quarter revenues decreased 3 percent to $1.64 billion from $1.69 billion, while diluted earnings per share ("EPS") increased 25 percent to $2.61 from $2.08 and adjusted diluted EPS rose 12 percent to $3.04 from $2.72.
 
"While the fourth quarter was weighed down by challenging operating conditions, including unexpected and extreme weather on the West Coast that compounded the impact of an already delayed grain harvest, it once again highlighted our resiliency and ability to operate efficiently under tough conditions," said E. Hunter Harrison, CP's Chief Executive Officer.
 
"I am particularly proud of our people who worked tirelessly over the last three months of 2016 to deliver for our customers in a safe and efficient manner."
 
View the Fourth-Auarter Earnings Release and Financial Reports
 
FULL-YEAR 2016 RESULTS

  • Revenues decreased 7 percent to $6.23 billion from $6.71 billion;
     
  • OR fell to a record 58.6 percent, improving on the 2015 reported OR by 140 basis-points and the adjusted OR by 240 basis-points;
     
  • Reported diluted EPS increased 27 percent to $10.63 from $8.40; adjusted diluted EPS rose 2 percent to $10.29 from $10.10;
     
  • Free cash flow of $1 billion.

"2016 featured stiff economic headwinds and a challenging volume environment, headlined by a precipitous decline in crude oil shipments and weakness in grain movements, particularly in the first half," Harrison said.
 
"These are not excuses, but opportunities to showcase our operating ability and leadership. As we have shown over the last four years, the precision railroading model works in all economic conditions."
 
In 2017, CP will continue to find opportunities to enhance the productivity, fluidity, and safety of its operations.
 
"With continued margin improvement and an anticipated increase in volumes, led by a stronger bulk outlook, we expect adjusted diluted EPS growth to be in the high single-digits," said Keith Creel, CP's President and Chief Operating Officer.
 
"With our strong leadership team, plus the commitment and discipline shown by the thousands of men and women every day at CP, the franchise is well positioned for 2017 and beyond."
 
CP's expectations for adjusted diluted EPS growth in 2017 are based on adjusted diluted EPS of $10.29 in 2016.
 
CP assumes that in 2017 the Canadian-to-U.S. dollar exchange rate will be in the range of $1.30 to $1.35, the average price of West Texas Intermediate (WTI) will be approximately US$45 to US$55 per barrel.
 
To further enhance safety and fluidity of the network, CP also plans to invest approximately $1.25 billion in capital programs in 2017, an increase of 6 percent over the $1.18 billion spent in 2016.
 
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