April 20, 2016 8:00 AM, EDT

Canadian Pacific Railway Announces Buyback as Profit Tops Estimates

Canadian Pacific

Canadian Pacific Railway, having failed in its bid to buy Norfolk Southern Corp., will buy back as much as C$1.31 billion ($1.04 billion) of its stock, confirming an effort outlined by CEO Hunter Harrison.

Canada’s second-biggest railroad also plans a 43% increase to its quarterly dividend, to 50 Canadian cents a share, as it reported profit that topped analysts’ estimates. The board authorized a buyback of as many as 6.91 million common shares, the Calgary, Alberta-based company said in a statement April 20. That would value the repurchase at C$1.31 billion based on the April 19 closing price at the maximum buyback.

Harrison said repeatedly during the five-month public campaign for Norfolk Southern that he probably would start repurchasing stock if the acquisition attempt failed. Canadian Pacific abandoned efforts to buy Norfolk Southern last week amid mounting opposition from shippers, U.S. politicians and rival railroads.

Adjusted earnings rose to C$2.50 a share, beating the C$2.42 average of 24 estimates compiled by Bloomberg News. Revenue fell 4% to C$1.59 billion, trailing the C$1.61 billion average estimate.

Operating expenses fell 11% to C$938 million, paced by a 36% plunge in fuel costs to C$125 million and a 13% decline in compensation and benefits to C$329 million.

Shares rose 1.7% to C$189.70 on April 19. The stock has gained 7.3% since the start of the year, beating the 6.6% advance of Canada’s benchmark Standard & Poor’s/TSX Composite Index.