Canadian Pacific beats profit estimates, sees higher 2020 shipments from trade deal

(Reuters) - Canadian Pacific Railway Ltd <CP.TO> topped analysts' estimates for quarterly profit helped by higher freight revenue from crude shipments, and the company said it expects the U.S.-China trade deal to lift grain volumes in 2020 benefiting its sales.

Canadian railroad operators are getting a boost from shipping oil for producers looking for alternatives to congested pipeline until recently when Alberta's output cuts in January last year hurt crude-by-rail volumes.

The volumes, however, started recovering after Alberta eased the curtailments in October and said it would allow companies to produce additional oil if they move it by rail.

"This was..our largest crude-by-rail quarter in the company's history, with over 36,000 carloads. We're expecting a similar run rate as we look out to the first quarter and beyond," CP Head of Marketing John Brooks said on a post-earnings call with analysts.

Revenue in CP's energy, chemicals and plastics segment, which also contains its crude-by-rail shipments, rose 33.1% to C$491 million.

The company's results come a day after larger rival Canadian National Railway Co <CNR.TO> also said it sees crude shipments as a growth driver in 2020.

Progress in U.S.-China trade deal talks boosted volumes in CP's U.S. business by 3% in the quarter, as soybean shipments to the Pacific Northwest rose. The company said it expects to continue to benefit in 2020 as China firms up purchases of U.S. goods.

"Frankly, we've started to see a little bit of upside as some of the positive outcomes of this trade deal emerge," a company executive said, adding that CP was anticipating an improvement in its U.S. grain business towards the end of the year.

China is by far the world's biggest soybean importer. Investors are awaiting signs of a pick-up in Chinese demand promised when Washington and Beijing signed the Phase 1 trade deal on Jan. 15.

The company also forecast high single-digit to low double-digit adjusted earnings per share growth for 2020. CP earned adjusted earnings of $16.44 in 2019.

Total carloads, the amount of freight loaded into cars during a specified period, fell 7.8% in the fourth quarter. However, the company posted a 10% rise in energy, chemicals and plastic shipments.

Freight revenue rose 3% to $2.02 billion in the quarter.

The company said net income rose to C$664 million ($505 million), or C$4.82 per share, in the quarter ended Dec. 31, from C$545 million, or C$3.83 per share, a year earlier.

Revenue rose to C$2.07 billion from C$2 billion.

Excluding items, CP earned C$4.77 per share, beating the average analysts' estimate of C$4.66, according to IBES data from Refinitiv.

(Reporting by Sanjana Shivdas in Bengaluru; Editing by Arun Koyyur and Shailesh Kuber)