Canadian Pacific Kansas City Ltd. has faced a financial setback of $200 million due to the ongoing trade tensions initiated by the United States, as revealed by CEO Keith Creel. Despite the challenges, Creel expressed optimism amidst uncertainties surrounding the North American trade agreement.
During a conference call with analysts, Creel highlighted the significant impact of approximately $200 million in lost revenue attributed to the prevailing uncertainty in the market. As the head of the only railway network spanning all three North American countries, Creel emphasized the potential benefits of renegotiating the United States-Mexico-Canada Agreement to enhance trade and address trade imbalances.
Creel underscored the importance of fostering positive trade relationships between the three nations, emphasizing the mutual dependence for economic success. He expressed hope for the timely renewal of the agreement, projecting a potential renewal before the upcoming midterms.
Despite the challenges posed by the trade environment, Canadian Pacific Kansas City Ltd. reported a modest one percent increase in revenue to $3.92 billion in its latest quarter. Operational efficiencies and freight volume improvements contributed to the revenue growth, with notable gains in grain revenues offset by weather-related disruptions at the Port of Vancouver.
Although the company witnessed a year of solid earnings growth, profits declined by 10% in the latest quarter, dropping to $1.08 billion from $1.20 billion compared to the same period last year. Apart from trade uncertainties, the railway industry has been grappling with concerns surrounding potential mergers, notably Union Pacific Corp.’s proposed acquisition of Norfolk Southern Corp.
Creel expressed reservations about the merger, cautioning against potential negative impacts on competition and market dynamics. The proposed consolidation has raised regulatory scrutiny, with the Surface Transportation Board rejecting the merger application as incomplete and requesting further details from the involved parties.
Looking ahead, Canadian Pacific Kansas City Ltd. anticipates mid-single-digit volume growth and low double-digit core adjusted earnings per share growth for 2026. The company also plans to reduce capital expenditures by 15% to $2.65 billion and announced a quarterly dividend of nearly 23 cents per share on outstanding common shares, payable on April 27.