Canadian Pacific Kansas City Ltd. has faced a $200 million setback due to the ongoing tariff conflict initiated by the United States, according to CEO Keith Creel. Despite this, Creel remains optimistic amidst uncertainties surrounding the North American free trade agreement.
Addressing analysts during a conference call, Creel mentioned that the company has already felt a significant impact, estimating revenues to have been reduced by at least $200 million. As the head of the sole railway spanning all three North American countries, Creel sees potential benefits in the forthcoming renegotiation of the United States-Mexico-Canada Agreement. He believes that reshaping cargo flows could help alleviate the trade deficit highlighted by U.S. President Donald Trump.
Creel emphasized the importance of a positive renewal of the USMCA, emphasizing the critical interdependence among the three nations for success. He expressed hope for the agreement to be renewed by the summer, foreseeing a potentially turbulent path ahead but maintaining confidence in overcoming challenges.
Despite a 10% decline in profits, CPKC managed to increase its revenue by one percent to $3.92 billion in the latest quarter. Improved operational efficiency and a slight uptick in freight volumes contributed to this growth, with record grain revenues partially offset by adverse weather conditions at the Port of Vancouver.
National Bank analyst Cameron Doerksen highlighted CPKC’s growth prospects driven by new business acquisitions and synergies from mergers. Although the company reported a decline in net income to $1.08 billion in the quarter ending December 31, compared to $1.20 billion a year earlier, it maintained a positive outlook.
In addition to trade concerns, the rail industry faces anxieties stemming from Union Pacific Corp.’s proposed acquisition of Norfolk Southern Corp. in an $85 billion deal. Creel expressed apprehensions over potential market dominance and adverse effects on competition and customers if the merger proceeds unchecked.
Regarding the merger application, the U.S. Surface Transportation Board deemed it incomplete, prompting further clarification from the involved parties. Creel cautioned against the consolidation’s potential risks and urged for careful consideration to maintain a balanced rail transportation system in North America.
Looking ahead, CPKC anticipates mid-single-digit volume growth and low double-digit core adjusted diluted earnings per share growth for 2026. The company plans to reduce capital expenditures by 15% to $2.65 billion while also declaring a quarterly dividend of nearly 23 cents per share on outstanding common shares, payable on April 27.
