Canadian Pacific first quarter profit quadruples as proxy fight rages
2012 04 24
- Details
CANADA's second railway, the Canadian Pacific (CP), has posted a fourfold increase in first quarter profit to C$142 million (US$142.9 million) year on year, drawn on revenues of C$1.4 billion, a rise of 18.3 per cent.
The Calgary-based company also boosted operating profit 66 per cent to C$274 million in the same period.
All this was happened as CP management fended off a proxy battle with its largest shareholder, activist investor Bill Ackman, of Pershing Square Capital Management, who said profits were not high enough.
Said CP chief executive Fred Green: "Our record operating metrics are driving enhanced financial results, as evidenced by a strong first quarter performance. By aggressively executing on the Multi-Year Plan, CP delivered an increase in revenues of C$213 million.
"We have improved operating momentum, we are delivering excellent service and we have a stronger, more resilient rail network. This quarter, we generated an 18 per cent year-over-year increase in freight revenues. Looking ahead, we are confident we can continue to deliver improvements in our operating metrics and financial performance and further growth in shareholder value," said Mr Green.
But Mr Ackman, the rebel shareholder, argued that the railway isn't improving profitability fast enough. He is pushing a slate of seven directors and trying to replace Mr Green with E Hunter Harrison, former CEO of rival Canadian National Railway, the country's largest. The proxy vote is slated for May 17 at the annual shareholder meeting.
"Last year, when they put out their results they said, 'horrible winter, that's why we had a 90-plus per cent operating ratio'," Mr Ackman told Reuters. "This time, what they don't remind you is that this is one of the best winters in the last 100 years."
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