Three-month TSX trading for Canadian Pacific Railway

Canadian Pacific Railway Ltd. reported a 31 per cent drop in first-quarter profit Thursday to $62.5 million because of a sharp decline in the movement of potash, coal and automotive products.

Earnings amounted to 39 cents per share, down from $90.7 million, or 59 cents per share, for the same period a year ago. Analysts surveyed by Thomson Reuters on average expected earnings of 48 cents a share.

The railway said carloads of freight declined by 19 per cent from a year ago, with potash down by 70 per cent, automotive products by 43 per cent and coal by 30 per cent.

"As we experienced rapidly declining volumes in the quarter, we successfully reduced variable expenses while delivering consistent service to our customers," CEO Fred Green said in a release.

"The unprecedented temporary decline in traffic in some of our key markets … has resulted in more than 2,400 employee layoffs to date," he said.

CPR said it plans to reduce its capital spending program in 2009 to between $720 million and $740 million, down from its original projection of between $800 million and $820 million, and from spending of $1 billion in 2008.

In a conference call with analysts, chief operating officer Brock Winter said the company is "aggressively pursuing every operational cost control opportunity available given the slowing economy."

"In an unfortunate but necessary step, our temporary layoff of crews and maintenance staff today sits at 2,400. This is about 23 per cent of our unionized workforce," he said.

"And we are employing other levers to reduce the cost of the remaining workforce, such as elimination of overtime, with the exception of emergency situations," Winter said.

More than 350 road and yard locomotives, or about 23 per cent of the fleet, have been idled and 16,000 rail cars — 26 per cent of the fleet — have been put in storage.

Shares of Canadian Pacific closed up $1.42 to $42.42 on the TSX.

With files from The Canadian Press