Canadian Pacific Kansas City Ltd. has faced a financial setback of $200 million due to the ongoing trade disputes initiated by the United States, according to CEO Keith Creel. Despite this, Creel remains optimistic amidst uncertainties surrounding the North American free trade agreement.
During a conference call with analysts, Creel mentioned that the company has already felt the impact of approximately $200 million in lost revenue because of the prevailing trade uncertainties. He highlighted the importance of the upcoming renegotiation of the United States-Mexico-Canada Agreement (USMCA) in potentially benefiting all three nations involved and addressing trade imbalances.
Creel emphasized the significance of trilateral trade among the three countries, stressing that a positive renewal of the USMCA could be mutually advantageous. He expressed hope for the agreement’s renewal by the summer, speculating that it might occur before the midterms.
In its most recent financial quarter, CPKC saw a slight increase in revenue to $3.92 billion, attributed partially to enhanced operational efficiency and a rise in freight volumes. Despite this, the company reported a 10% decrease in profits for the quarter, with net income dropping to $1.08 billion from $1.20 billion compared to the same period the previous year.
Apart from trade tensions, concerns have arisen within the rail industry regarding Union Pacific Corp.’s proposed acquisition of Norfolk Southern Corp. in an $85 billion deal. Creel cautioned against the potential negative impacts of consolidation in the industry, warning of the risks associated with such a merger.
CPKC also announced a rise in core adjusted diluted earnings and net income for the full year, with predictions of volume and earnings growth for the upcoming years. The company plans to reduce capital expenditures and issued a quarterly dividend on outstanding common shares.
The Surface Transportation Board in the U.S. rejected the UP-NS merger application as incomplete, prompting further discussions on the matter. There is speculation that the merger could gain approval under the current administration, given the board’s composition and recent political changes.