Canadian Railroads > CP stock tumbles as they admit lower earnings

CP admitted today that they will miss their earnings estimates by 12%, due they said to lower volumes of grain, potash, and "a challenging volume environment". EHH has vowed to cut costs and trim expenses to bring estimates back in line (Read that to mean staffing cuts). Trackside observers have noticed that trains that used to be purely intermodal now are being filled out with general manifest , and that fewer DPUs are being used as train lengths diminish.
Quite sad to see so many engines parked and for sale. Wasn't that long ago that CP was using any power they could get their hands on, and SD-40-2 of various colours and reporting marks were seen at the head end of many a train. Trains had odd combinations of GP-9s (8200 class), with SD-90s (9100 class) all to get to the required hp/ton ratio. It does appear that CN is building while CP is withering.

Posted from iPhone

Oil is down, and the fires around Fort MacMurray wreaked havoc on the tar sands industry.  CP is highly leveraged to the oil shipping businesss, much more so than CN.

What does Fort MacMurry have to do with CPR.  I thought that oil moved CN.

Mike Root
Madras, OR

I wonder if EHH's budget/costs/expenses will get trimmed as they hand out all of the furlough notices?

irhoghead Wrote:
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> I wonder if EHH's budget/costs/expenses will get
> trimmed as they hand out all of the furlough
> notices?

It wasn't that long ago when 'ol Hunter chased off some container business (maritime I think) because it wasn't considered profitable enough.  So CN took it and said "thank you".  Now, 'ol Hunter doesn't look so smart.  He'll never learn you cannot, long term, cut your way to profitability without consequences.  Shippers and consignees have long memories...


Allen

EHH said there was no money in the import container business so he discouraged it.  CP used to have three container trains a day departing the Port of Montreal.  Now CP has one and it's often filled out with general freight.

KG

shortlineboss Wrote:
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> What does Fort MacMurry have to do with CPR.  I
> thought that oil moved CN.

It does, but Canada's total oil exports dropped by about 35% as fires threatened pipelines as transmission facilities.  The Athabasca pipeline directly links the oil sands area with Hardisty, where CP loads.  My understanding is that pipe was down for at least some of May.

Canadian oil shipping is also affected by the availability of diluent, which was interrupted by the fires.  You can see the impact in daily pricing, but I'd be interested in hearing the number of toil rain starts on a weekly basis for CP and CN during April and May and June.

Reuters

Or  maybe they should just stop making outlandish earnings estimates so as not to trigger a temper tantrum by pipsqueak Wall Street analysts. Whatever did they do before oil was such a a big business ?

Wonder if there's a clause in the agreements with the various unions where if the company starts to operate in the red it can institute pay cuts to agreement employees??? If there is you can be sure that old stone heart EHH will pull that trigger quickly. More likely is that he'll furlough as many as possible first??  Just wondering. 

    Ross Rowland

EHH house of cards is starting to shake...  As mentioned above, you can't cut yourself to long term prosperity and EHH approach to profits now and, well I guess, hope for the best in the future, probably won't work out too well.  He doesn't seem to pay any attention to growing the business, all that seems to matter is short term profits no matter how badly you have to gut the company, and piss off the employees and customers, which will end up badly harming the CP for the long term.

The world is in a recession for commodities, and CP is very heavily dependent on transporting commodities (more so than the CN).  The smart thing to do is take the profit hit now, but still set the company up to reap the benefits when the commodities traffic comes back (it always does, the commodities businesses have always been a boom/bust cycle).

In a push to reduce manpower levels, management is pushing to make all Roadswitcher jobs conductor only, and re-introduce belt pack operations to as many yard jobs as possible to eliminate engineer positions. Somebody forgot to tell them that when you eliminate crew members the overall efficiency declines. You can't service customer facilities as quickly when one person has to do the work of two. The net result is a decline of service, the customer getting pissed off and leaving, and a further reduction in revenue. I swear the company looks at it like "oh good, we lost another one, we can cut that job completely now and shed 2 more jobs". It's like killing the company slowly by 1000 paper cuts. As others have mentioned, you rarely can cut to the bone to achieve long term prosperity.

Posted from iPhone

kgmontreal Wrote:
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> EHH said there was no money in the import
> container business so he discouraged it.  CP used
> to have three container trains a day departing the
> Port of Montreal.  Now CP has one and it's often
> filled out with general freight.
>
> KG

Does CP 113 not have any traffic from the Port?

one cost cutting move is the end of using taxis (Halcon, Etc) to transport crews. Any transport that would normally be done by taxi, is now done by a company officer and their truck.

Nothing like being at the away from home terminal, knowing that there is no train home for you. Before they would put you in a taxi and have you home in two hours, now you are left there to rot on excess lay, to be deadheaded home on a freight train that might take 10 hours or more to reach the destination...all for the same 100 mile ticket that you used to get in a taxi. And they wonder why employee morale is at an all time low.

Posted from iPhone

Finderskeepers Wrote:
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> Nothing like being at the away from home terminal,
> knowing that there is no train home for you.
> Before they would put you in a taxi and have you
> home in two hours, now you are left there to rot
> on excess lay, to be deadheaded home on a freight
> train that might take 10 hours or more to reach
> the destination...all for the same 100 mile ticket
> that you used to get in a taxi. And they wonder
> why employee morale is at an all time low.
>
> Posted from iPhone

I remember employees predicting this when Hunter came over to CP.  What is truly sad is he doesn't care.


Allen

bradleymckay Wrote:
(snip)
>
> I remember employees predicting this when Hunter
> came over to CP.  What is truly sad is he doesn't
> care.
>
>
Yes.

The way the system is set up, EHH works for the shareholders. Not the customers, and not the employees, even though the railroad needs both.

What i see as particularly difficult is that the employees don't own a meaningful share of the company, like 20%, and have seats at the board table.  In many German, Czech, Austrian, Danish, etc firms the employees own a big chnk of the company and have viewpoints which are carefully considered. Even to shifting of work or sale of plants.

Having a 3% dividend on a few hundred thousand dollars of stock at retirement is nice, too.

Employees have given up millions in contract negotiations. Why haven't they demanded a share of the profits those give backs have produced?  Living paycheck to paycheck is no way to prosperity. Management doesn't do that, they rely on grants of stocks and options on future issues of stock.