Canadian Pacific Kansas City Ltd. has faced a financial setback of $200 million due to the ongoing trade tensions initiated by the United States, according to CEO Keith Creel. Despite this challenge, Creel maintained a positive outlook amidst uncertainties surrounding the North American trade agreement.
Speaking during a conference call with analysts, Creel mentioned that the company has already experienced a significant revenue impact, estimating it to be around $200 million or potentially higher. As the head of the only railway that spans across the three North American countries, Creel highlighted the importance of the upcoming renegotiation of the United States-Mexico-Canada Agreement (USMCA) in potentially balancing trade flows and addressing trade imbalances.
Creel emphasized the mutual benefits that a successful renewal of the USMCA could bring, stressing the critical nature of trade between the three nations for their collective success. He expressed optimism that the agreement, which has seen trilateral trade surge to over US$1.6 trillion since the inception of NAFTA in 1994, would be renewed by this summer.
Although CPKC managed to increase revenue by one percent to $3.92 billion in the latest quarter, driven by enhanced operational efficiency and a slight uptick in freight volumes, the company reported a 10 percent decline in profits. Despite this decrease in net income to $1.08 billion from $1.20 billion in the same period the previous year, CPKC remains positive about its growth prospects, citing new business wins and merger-related synergies as key drivers.
Apart from trade concerns, the rail industry has been grappling with potential mergers, notably Union Pacific Corp.’s proposed acquisition of Norfolk Southern Corp. in an $85 billion deal. This merger could reshape the rail landscape in the United States and trigger further consolidation in the sector, raising concerns about market competition and customer costs.
Creel cautioned against the potential negative impacts of such mergers on competition and market dynamics, warning that unchecked consolidation could have far-reaching consequences for the rail transportation system in North America. While the Surface Transportation Board rejected the UP-NS merger application as incomplete, there is speculation that it could gain approval under the current administration’s pro-business stance.
Despite reporting a three percent increase in core adjusted diluted earnings to $1.33 per share, slightly below analysts’ expectations, CPKC remains optimistic about its financial outlook for the future. The company forecasts volume growth in the mid-single digits and a low double-digit increase in core adjusted diluted earnings per share for 2026, alongside a 15 percent reduction in capital expenditures.
Furthermore, CPKC announced a quarterly dividend of nearly 23 cents per share on outstanding common shares, reinforcing its commitment to shareholder returns and financial stability.
