Canadian Pacific Kansas City’s second-quarter 2023 results, which include Kansas City Southern figures on a consolidated basis from April 14, 2023 (two weeks into the quarter), the date CP acquired control of KCS, were “challenging,” President and CEO Keith Creel reported on July 27.
Despite that, CPKC “still expects to deliver mid-single-digit core adjusted combined diluted EPS growth in 2023,” Creel said. “The long-term growth opportunities for this franchise are unique and undeniable. With our CPKC advantage, we are extending our reach for our customers, introducing new service offerings to the marketplace and creating new competition in North American supply chains.”
CPKC noted that its 2Q23 results, compared to the prior-year period, reflected the companyrecording its interest in KCS under the equity method of accounting from Dec. 14, 2021 to April 13, 2023:
- Reported operating ratio (OR) increased by 970 basis points to 70.3% from 60.6%.
- Core adjusted combined OR increased 430 basis points to 64.6%.
- Reported diluted EPS increased to $1.42 from $0.82 due to the net impact of the derecognition of the investment in KCS upon consolidation.
- Core adjusted combined diluted EPSdecreased to $0.83 from $0.95.
- Federal Railroad Administration-reportable train accident frequency declined 32% to 0.76 from 1.11.
In providing 2023 guidance, CPKC said it expects core adjusted combined diluted EPS to grow mid-single-digits vs. 2022 core adjusted combined diluted EPS of $3.77. CPKCs reported diluted EPS was also $3.77 in 2022.
“This quarter we made history by completing our transformational combination to create the first single-line transnational railroad linking Canada, the United States and Mexico,” said Creel. “By uniting the outstanding railroaders at Canadian Pacific and Kansas City Southern to form our new CPKC family, we already are changing the freight rail industry, redrawing the map and delivering on the many benefits of our combined network.”
