Weak grain crop, supply chain challenges attributed to CP Rail lowering its volume outlook for Q3

Canadian Pacific Railway lowered its volume outlook for the year as a weak grain crop and supply chain challenges weighed on its third-quarter results.

Canadian Pacific Railway Ltd. lowered its volume outlook for the year as a weak grain crop and supply chain challenges weighed on its third-quarter results.

The company said Wednesday that it now expects low single-digit volume growth this year, as measured in revenue ton-miles, compared with last year, while in July CP said it expected high single-digit growth.

However, the railway says it remains confident that it will deliver full-year double-digit adjusted diluted earnings per share growth.

“There’s certainly challenges as well look forward,” said chief executive Keith Creel told a conference call with financial analysts to discuss its results.

Grain revenue was down 21 per cent compared with a year earlier as the crop is expected to be 40 per cent smaller than last year because of dry conditions on the Prairies.

Automotive revenue was down eight per cent as a semiconductor chip shortage has hit production in the industry. Shipping was also disrupted by wildfires that damaged tracks in British Columbia.

Meanwhile demand for materials and goods was up, leading to a 35 per cent climb in revenue for metal, minerals and consumer products, a 27 per cent climb for energy, chemicals and plastics, and a 22 per cent increase for coal.

Overall, the increase in some segments helped push CP revenue to $1.94 billion for the quarter, up from $1.86 billion in the same quarter last year.