Yahoo Finance Canadian Pacific CEO Harrison to leave early
By Allison Lampert
(Reuters) - Canadian Pacific Railway Ltd (Toronto:CP.TO - News) (NYSE:CP - News), Canada's No. 2 railroad operator, reported a lower-than-expected adjusted quarterly profit on Wednesday and said its chief executive would leave five months earlier than originally expected.
Hunter Harrison will officially step down Jan. 31 and will take vacation leave with immediate effect. He will be replaced by Chief Operating Officer Keith Creel.
Last April, a company spokesman said Harrison planned to serve out his contract ending in June 2017.
The company declined on Wednesday to give details on Harrison's retirement plans or the terms of a separation agreement reached with the railroad veteran.
According to a CP statement, Harrison asked CP's board for an arrangement "that would allow him to pursue opportunities involving other Class 1 Railroads."
RBC analyst Walter Spracklin said in a note to clients Wednesday that Harrison may have been referring to rail operator CSX (NasdaqGS:CSX - News) "given it has a CEO that is expecting to retire soon."
Harrison also got a "limited waiver" of his non-compete obligations and forfeited C$118 million in benefits, CP said.
On a call with analysts, Creel said CP expects slightly positive volume growth in 2017, fueled by increased deliveries in potash and grain, despite weak crude shipments acting as a headwind during the first quarter and in 2016.
"As we go into 2017 and 2018, you'll see top line growth, you're going to see bottom line control," Creel told analysts on a conference call.
CP is expecting to see a stronger second quarter, after a "challenging" first three months of the year, he said.
The Calgary-based company reported a 20.4 percent jump in net income to C$384 million ($290 million), or C$2.61 per share, in the fourth quarter ended Dec. 31, from C$319 million, or C$2.08 per share, a year earlier.
Excluding certain items, the company earned C$3.04 per share, missing the average analyst estimate of C$3.11, according to Thomson Reuters I/B/E/S.
The company said its operating ratio, a key metric, dropped to 56.2 percent in the fourth quarter from 59.8 percent a year earlier.
The lower the ratio, which measures operating costs as a percentage of revenue, the more efficient the railroad.
CP also said it plans to invest about C$1.25 billion in capital programs in 2017, an increase of 6 percent over C$1.18 billion spent in 2016.
Revenue fell about 3 percent to C$1.6 billion. Analysts on average had expected C$1.65 billion.
(Reporting by Gayathree Ganesan and Ahmed Farhatha in Bengaluru; Editing by Maju Samuel and Chris Reese)
