Canadian Pacific Kansas City Ltd. Q1 FY2025 earnings call

Keith Creel thanked the 20,000-strong team. Q1 revenue was $3.8 billion, up 8%, with operating ratio 62.5 (150 basis points improvement), earnings up 14% to $1.06. Safety was at a record level. The company divested its 50% stake in the Panama Canal Railway. Announced a 4% share buyback program and a 20% dividend increase. Operational improvements included precision scheduled service model, labor agreements ratified, working with FRA on safety and operational initiatives, and a capital plan for growth and efficiency.

In the first quarter, the bulk business saw grain revenues up 4% with 3% volume growth, U.S. grain volumes down 5% but well-positioned, potash revenues up 10% with 8% volume growth, and coal revenue up 21% with 10% volume growth. The merchandise business had Energy, Chemicals and Plastics growing 3% on flat volumes, Forest Products up 2% on 4% volume growth, Metals, minerals and consumer products down 1% on flat volumes, automotive revenues up 18% on 24% volume growth. Intermodal revenue and volumes were up 4%, with Domestic Intermodal up 8% and International Intermodal flat but with growth opportunities.

Updated guidance reflects impact of trade policies and stronger Canadian dollar, with mid-single-digit volume growth expected. OR is expected to improve sequentially from the 62.5 seen in Q1, with expectation of sub-60 OR for the year.

Macro environment uncertainty, trade policy uncertainty, currency uncertainty.

Q: About import cliff into ports and impact on Canadian/Mexican ports A: John Brooks discussed minimal impact on international volumes, strong growth at Lazaro, and opportunities created by crisis Q: On volume cadence and OR A: Nadeem Velani talked about FX impact and OR improvement expectations Q: On auto front and reshoring A: John Brooks discussed auto production running, inventory levels, and site-ready locations