Canadian Pacific Kansas City Reports 8% Revenue Growth in Q1 2025

Canadian Pacific Kansas City Limited (CPKC) reported a strong financial performance for the first quarter of 2025, with total revenues reaching $3,795 million, an increase of 8% from $3,520 million in the same period of 2024. The growth was primarily driven by a rise in freight revenues, which amounted to $3,727 million, up from $3,427 million year-over-year. The company's net income attributable to controlling shareholders also saw a significant increase, rising to $910 million from $775 million, resulting in diluted earnings per share of $0.97, compared to $0.83 in the previous year.

Operating expenses for the quarter totaled $2,478 million, reflecting a 5% increase from $2,371 million in the prior year. The rise in expenses was attributed to higher costs in several areas, including fuel, materials, and depreciation. Notably, compensation and benefits expenses decreased slightly to $682 million from $690 million, primarily due to a reduction in stock-based compensation. The operating ratio improved to 65.3%, a 210 basis point enhancement from 67.4% in 2024, indicating better operational efficiency.

Strategically, CPKC announced the sale of its 50% equity stake in the Panama Canal Railway Company to APM Terminals for gross proceeds of $350 million, which is expected to yield a pre-tax gain of approximately $230 million in the second quarter of 2025. Additionally, the company initiated a normal course issuer bid to repurchase up to 37.3 million common shares, reflecting its commitment to returning value to shareholders. The quarterly dividend was also increased by 20% to $0.228 per share, payable on July 28, 2025.

Operationally, CPKC reported a slight decrease in average employee headcount to 19,749 from 19,997 in the previous year, reflecting efficient resource management. The company also experienced a 3% increase in gross ton-miles (GTMs), indicating higher freight volumes, particularly in coal, grain, and automotive sectors. However, train miles decreased by 2%, suggesting improved productivity as the company managed to transport more freight with fewer train miles.

Looking ahead, CPKC anticipates continued growth driven by strong demand in its freight segments and operational efficiencies. The company expects its core adjusted effective tax rate to remain around 24.50% for 2025, and it is focused on leveraging its expanded network following the integration of Kansas City Southern to enhance service offerings across North America. The management remains optimistic about navigating market conditions and achieving its strategic objectives in the coming quarters.