WILL MEET TARGETS
CN Forecasts soft landing

Hugo Miller – Bloomberg News

New York – Canadian Pacific Railway Ltd. Still expects revenue growth of as much as six per cent this year as fertilizer and sulphur demand outweigh storm and strike-linked losses.

“We lost our rhythm and you don’t just jump back into that rhythm, but we’re well positioned” for the rest of the year, chief executive Fred Green said yesterday at a New York transportation conference. The company expects to meet its revenue target and its earnings goal of $4.30 to $4.45 a share, he said.

Avalanches, floods and rock slides in Western Canada disrupted Calgary-based CP Rail and rival Canadian National Railway Co. in the first quarter.

Surging overseas demand for potash and sulphur moved by rail benefited both companies. CP’s first-quarter profit climbed 18 per cent, while Montreal-based CN reported a 10-per-cent decline.

CN “is expecting a soft-landing in the second quarter,” chief financial officer Claude Mongeau said at the conference hosted by Bear Stearns Cos.

Both companies are threatened with labour disputes. A February work stoppage cut CN revenue by $60 million. Walkouts resumed last month after union members voted down a one-year labour contract, asserting the accord didn’t address “harassment” used by management to boost productivity.

CN’s striking workers returned on April 19th after Canadian lawmakers passed a back-to-work bill. A government-appointed mediator will review the offer from both sides and select one to stand as the binding collective agreement.

“The clock is ticking” on the 90-day arbitration process. Mongeau said, adding CN would like to see a three-year deal that adds stability.

Talks between CP and a union representing 3,000 rail maintenance workers broke down last month, leaving the union with the right to call a strike on 72-hours notice.