CPR outlines rail-smooth future to investors

TORONTO (Aug. 3, 2001) — Canadian Pacific Railway Co., priming investors for its spinoff from Canadian Pacific Ltd., plans to increase revenue of 4% a year and earnings of 10% a year, contain operating expense increases to 2% a year, and boost its operating ratio to 73% by 2004.

The company announced the targets yesterday at a meeting in Toronto. Over the next two weeks, the railway plans to make nine presentations to investors in New York, Boston, Montreal, Toronto, Winnipeg and Vancouver.

Anticipating volume growth of 3% a year, CPR plans to save $150 million by 2004 through more tightly scheduled railway operations and controlled administrative expenses. The railway said it has already cut $300 million a year off its operating costs as a result of an extensive infrastructure renewal and its scheduled railway program.

In addition, CPR hinted at a yield-management pricing strategy involving more structured rates rather than confidential contracts, as well as premiums for off-peak periods to reduce the impact of seasonal traffic flows.

The railway is expected to be spun off on Oct. 1.