Canadian Pacific Railway to cut up to 1,000 jobs as rail volume slumps
Canadian Pacific Railway plans to cut 1,000 positions this year as it adjusts to lower shipment volumes and profits.
The Calgary-based rail company says most of the cuts to unionized and management positions will result from attrition and kick in by the middle of 2016.
Since 2012, the railway has cut 6,000 to 7,000 positions, including 1,200 last year alone.
CP made the announcement on a conference call Thursday after releasing its fourth-quarter and year-end results.
"There's probably 1,000 additional heads to come out potentially in 2016," is how CEO Hunter Harrison replied to an analyst's question on the company's head count. "So there's still room there."
The company's numbers show profits slipped 29 per cent to $319 million, or $2.08 per share, in the three months before Dec.31. Those numbers are down from $451 million, or $2.63 per share, a year earlier.
For the year as a whole, however, CP saw revenue of $6.71 billion and $1.35 billion in profit — both record highs, but both less than what analysts had been expecting.
The company is seeing reduced demand for its services, as the North American economy shows signs of a slowdown. Once the impacts of currencies are stripped out, revenues from crude oil shipments were down 19 per cent this year, metals shipments were down 10 per cent and auto parts were down two per cent, according to an investor presentation released Thursday.
That could be poised to get worse. "The numbers were OK, but it was the guidance going forward that kind of freaked everybody out," said Barry Schwartz, the chief investment officer of Baskin Wealth Management in Toronto.
"This is a boom-bust business, the railroad business," he said, adding that CP's rival CSX said the economy is in a "freight recession" earlier this week.
The job cuts are not surprising considering the reduced demand to ship commodities. "What's it going to look like if Canada goes into a recession," Schwartz said. "Are we still going to be shipping a lot of oil and resources and grains?"
CP is in the midst of trying to merge with U.S. railway Norfolk Southern, a deal that would create the largest rail company in North American but one that has thus far been rebuffed by the target company's board.
With files from The Canadian Press