CPKC Revenue Growth Accelerates as Volumes Pick Up
Third-quarter revenue reached $4.2 billion, up 15% from a year earlier, as revenue ton-miles rose 6% and core adjusted diluted EPS reached $1.28.
Canadian Pacific Kansas City (CP), the transnational freight railroad spanning Canada, the United States and Mexico, reported third-quarter revenue of $4.2 billion, a 15% increase from $3.7 billion a year earlier, accelerating from a 13% year-over-year rise in the second quarter.
Volumes, measured in revenue ton-miles, increased 6% from the year-ago quarter, faster than the 4% increase in the second quarter. President and Chief Executive Officer Keith Creel said the railroad was “running very well,” with growth across grain, intermodal and merchandise, and that the company remained on track to meet its commitments for 2026.
Freight revenue was $4,139 million. Grain rose to $904 million from $702 million, intermodal to $815 million from $668 million, energy, chemicals and plastics to $763 million from $701 million, metals, minerals and consumer products to $532 million from $458 million, automotive to $373 million from $343 million, potash to $182 million from $167 million, fertilizers and sulphur to $105 million from $102 million, and forest products to $211 million from $193 million. Coal was essentially unchanged at $254 million versus $255 million.
The reported operating ratio increased 130 basis points to 64.8% from 63.5% a year earlier, a larger year-over-year deterioration than the 90-basis-point rise to 64.6% in the second quarter. The core adjusted operating ratio increased 120 basis points to 61.9% from 60.7%. Higher fuel prices unfavourably impacted the reported and core adjusted operating ratios by 170 and 190 basis points, respectively.
Fuel expense rose to $667 million from $415 million in the year-ago quarter. Compensation and benefits were $711 million. Operating income increased to $1,487 million from $1,336 million.
Reported diluted earnings were $1.04 a share, up 3% from $1.01 a year earlier, reversing a 14% year-over-year decline to $1.15 in the second quarter. Core adjusted diluted EPS increased 16% to $1.28 from $1.10. Net income attributable to controlling shareholders was $917 million versus $920 million a year earlier.
The effective income tax rate including discrete items was 32.79% for the three months ended September 30, 2026, versus 24.34% a year earlier. Excluding discrete items, the rate was 24.75%. Discrete items included $96 million of amortization of purchase-accounting fair-value adjustments, a $94 million Canada Revenue Agency reassessment and $12 million of acquisition-related costs tied to the Kansas City Southern deal, a $17 million tax settlement with Mexico’s SAT, and $17 million of advisory costs related to the Surface Transportation Board’s review of the proposed Union Pacific–Norfolk Southern merger.
Cash and cash equivalents ended the quarter at $399 million. The company repurchased common shares for $1,425 million and paid dividends of $236 million.
Creel said the long-term opportunity remained “undeniable” and that CPKC remained confident in its ability to safely drive growth and generate long-term returns.
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