COMPETITION WATCH: CPR enjoys strong second quarter performance

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CALGARY, Alta — Canadian Pacific Railway says strong growth in five of its seven business lines in the second quarter of 2004 pushed revenue past the $1-billion mark.

The revenue increase helped drive net income up 146 per cent to $84 million in the quarter ended June 30. This compares with second-quarter 2003 net income of $34 million, which included a special charge for job reductions, an asset write-down and network restructuring.

Excluding foreign exchange gains and losses on long-term debt and the 2003 special charge, income increased 23 per cent to $104 million in the second quarter of 2004, compared with $84 million in second-quarter 2003. On the same basis, diluted EPS were $0.65, compared with $0.53.

Rob Ritchie, President and Chief Executive Officer of CPR, said: “I am pleased with our performance this quarter. We handled significantly higher volumes of freight and still maintained a fluid level of operations. There has been steady improvement in most of our productivity measures and the overall results we expected to see are materializing.”

CPR’s operating income in the second quarter of 2004 increased 19 per cent to $221 million, from $186 million in last year’s second quarter, excluding the special charge. Its operating ratio for the three-month period was 78 per cent, a 1.7 percentage-point improvement. Total revenues in the second quarter of 2004 were $1,005 million, an increase of $91 million, or 10 per cent, over $914 million in the same period of 2003.

– Bulk commodities generated $55 million, or almost two-thirds of the increase, reflecting continuing strong demand.
– – Intermodal revenue increased a further $21 million, or 9 per cent in the second quarter of 2004, on top of a record second-quarter 2003.
– – Revenues from industrial products were up $13 million, or 14 per cent, reflecting the North American economy’s strength.
– Operating expenses were $784 million in the second quarter of 2004, compared with $728 million the same period last year, excluding the special charge.

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