Canadian Pacific Kansas City reported higher third-quarter revenue and freight volumes, with growth in adjusted earnings outpacing reported earnings. The railroad said it remains on track to meet its commitments for 2026, despite macroeconomic headwinds and higher fuel costs.
Revenue rose 15% from a year earlier to $4.2 billion. Volume, measured in revenue ton-miles, increased 6%.
Key details
- Operating margins weakened year over year. CPKC’s reported operating ratio rose to 64.8% from 63.5%, while its core adjusted operating ratio increased to 61.9% from 60.7%. A higher ratio means operating costs consumed a larger share of revenue.
- Fuel costs were a significant drag on those measures. CPKC said higher fuel prices worsened its reported operating ratio by 170 basis points and its core adjusted ratio by 190 basis points.
- Earnings growth varied by measure. Reported diluted earnings per share increased 3% to $1.04, while core adjusted diluted EPS rose 16% to $1.28, from $1.10 a year earlier.
- Management cited growth across several markets. CEO Keith Creel pointed to grain, intermodal and merchandise, and said service remained strong. He also cited the railroad’s commercial pipeline and disciplined execution in maintaining the company’s outlook for the year.
- Adjusted figures are non-GAAP measures. CPKC cautioned that its core adjusted measures do not have standardized definitions and may not be comparable with similarly named measures at other companies.
The results show revenue and volumes advancing while operating-ratio measures deteriorated, with fuel prices identified as a substantial headwind. The gap between reported and core adjusted EPS growth also reflects that the two measures present different views of quarterly performance.