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October 19, 2016 9:40 AM, EDT

Canadian Pacific Cuts Profit Target as Commodities Cargo Slumps

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Canadian Pacific Railway Ltd. reduced its full-year profit target, amid revenue declines in commodities such as crude oil and a delayed grain harvest in western Canada.

Adjusted earnings will probably climb by mid-single digits from C$10.10 a share, CEO Hunter Harrison said Oct. 19 in a statement. The Calgary-based railroad in January forecast an increase of at least 10%, which the carrier subsequently reaffirmed.

Grain will be harvested later than expected after parts of Canada’s Prairie Provinces received three times the normal rainfall. Most of the crop will move early next year, Walter Spracklin, an analyst at RBC Capital Markets, said Oct. 11 in a note to clients.

Faced with an industrywide decline in cargo volume, Canada’s second-largest railroad has reduced staff and parked locomotives.

Canada’s second-largest railroad issued the revised forecast as it reported third-quarter adjusted earnings of C$2.73 a share. That fell short of the C$2.79 average of analyst estimates compiled by Bloomberg News. Revenue slid 9.1% to C$1.55 billion ($1.18 billion), compared with the C$1.62 billion that had been predicted.

Adjusted operating ratio, a measure of productivity that compares expenses to sales, improved to its “lowest-ever” 57.7%, the company said.