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January 19, 2018 3:45 PM, EST

Canadian Pacific Sees Solid Fourth Quarter

Canadian Pacific Train Canadian Pacific

Canadian Pacific Railway reported healthy fourth-quarter and yearly results, with income boosted in part by the recent reduction in the U.S. corporate tax code from 35% to 21%.

The railroad reported fourth-quarter 2017 operating income of C$753 million on revenues of $1.7 billion, both results up 5% from the fourth quarter of 2016. Analysts expected profits of $754 million, according to Bloomberg.

The quarter’s diluted earnings per share increased 159% to $6.77 from $2.61, as that included an income tax recovery of $527 million, primarily due to the U.S. tax code change and net of Canadian provincial tax rate increases, the company reported. Adjusted diluted earnings per share rose 6% to $3.22, a quarterly record.

Total freight revenues were $1.7 billion in the quarter while intermodal freight revenues rose 7% to $361 million. Freight revenue per carload declined 7% to $2.5 billion, despite a 1% rise in the intermodal freight revenue per carload to $1.4 billion.

The company saw freight revenue increases of 33% and 38% respectively for energy and metals in the quarter. In August, Canadian Pacific launched direct rail transportation service from Vancouver to Detroit. The service leveraged a transload facility in Vancouver and a live-lift operation at Portal, N.D., to accelerate cross-border shipments. The company said the program could cut transit times from the West Coast to Detroit by 48 hours.

For full year 2017, the Calgary-based railroad reported its revenues rose 5% to $6.6 billion, meeting analyst expectations. Adjusted diluted earnings per share rose 11% to $11.39, falling short of analysts’ expectations of $12.74.

CP reported net income of $2.4 billion, up 50% from 2016, and $560 million over analyst expectations of $1.8 billion. The income benefited from the U.S. tax change with income tax expenses dropping to $93 million from $553 million.

The company moved 2.6 million carloads in 2017, up 4% from 2016. Freight revenues per carload rose to $2,420 from $2,400 in 2016.