CP Rail profit beats on lower fuel expenses, higher shipments

(Reuters) - Canadian Pacific Railway Ltd <CP.TO> beat analysts' estimates for quarterly profit on Wednesday, driven by lower fuel expenses and higher shipments of coal, crude and fertilizers.

CP said its operating ratio, a closely watched productivity metric that measures expenses as a percentage of revenue, fell 220 basis points to a record-low of 56.1% in the third quarter. The lower the ratio, the more efficient a railroad.

Canada's second-largest railroad operator said average fuel price fell 10% to $2.41 per gallon in the third quarter, leading to a 7.1% fall in fuel expenses.

Total carloads, the amount of freight loaded into cars during a specified period, rose 1.4%, while rail freight revenue per carload increased nearly 3%, CP said.

Revenue in the energy, chemicals and plastics segment, which also contains its crude-by-rail (CBR) shipments, rose about 13% to C$382 million in the quarter.

While CBR shipments fell short of the company's expectations, CP remained optimistic that the new Alberta government will come to a resolution on the transfer of its crude contract.

The current government is trying to offload onto the private sector nearly C$4 billion of crude-by-rail contracts that were signed by the previous government, amounting to 120,000 barrels-per-day of crude.

The company expects crude volumes to increase in the fourth from the third, it said on a post-earnings call.

Larger rival Canadian National Railway Co <CNR.TO> also beat quarterly profit estimates but cut its adjusted earnings forecast for the year, citing declining freight demand in North America.

CP, which maintained its full-year adjusted profit outlook, reduced its volume expectations to low-single digit revenue ton-mile (RTM) growth from mid-single digit RTM on delays in the Canadian grain harvest and export potash volumes.

RTM measures the relative weight and distance of freight transported by a railroad.

Canadian railway operators have been hit by a slew of problems, including lower-than-expected crude shipments and a late harvest of grains due to wet weather.

CP said adjusted net income rose 8.7% to C$640 million ($490 million), or C$4.61 per share, in the quarter ended Sept. 30.

Analysts on average had estimated earnings of C$4.52, according to IBES data from Refinitiv.

Total revenue rose 4.3% to C$1.98 billion but fell short of analysts' estimates of C$1.99 billion.

(Reporting by Dominic Roshan K.L. and Shanti S Nair in Bengaluru; Editing by Maju Samuel)