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Canadian Pacific Kansas City Limited (NYSE:CP) reported strong first-quarter 2025 results on April 30, with revenue increasing 8% year-over-year to $3.8 billion and diluted earnings per share rising 17% to $0.97. The railway operator demonstrated improvements across key operational and financial metrics while raising its earnings outlook for the full year.
Executive Summary
CPKC delivered robust performance in Q1 2025, driven by disciplined execution and strong demand across most business segments. The company achieved record safety performance and improved operational efficiency, with the operating ratio improving by 210 basis points to 65.3%.
"Our first quarter results demonstrate the strength of our network and our ability to deliver value for customers and shareholders," said Keith Creel, President and CEO of CPKC, according to the presentation materials. The company updated its 2025 guidance, now expecting 10-14% growth in Core adjusted diluted EPS.
As shown in the following comprehensive overview of first quarter highlights:
Operational Improvements
CPKC reported significant improvements in key operational metrics during Q1 2025. Average train weight increased by 5% to 9,034 tons, while average train length grew by 4% to 7,628 feet. Locomotive productivity improved by 3% to 163 GTMs per operating horsepower.
The company also achieved record safety performance, with FRA train accident frequency decreasing by 58% to 0.38 and FRA personal injuries declining by 14% to 0.98.
The following chart illustrates these operational improvements:
Revenue Analysis by Segment
Revenue growth was broad-based across most business segments in Q1 2025. On an FX-adjusted basis, Coal revenue increased by 21%, Automotive by 18%, and Potash by 10%. Only the Metals, minerals & consumer segment showed a slight decline of 1%.
The company’s revenue ton miles (RTMs) increased by 4%, while revenue per RTM grew by 5%. Carloads increased by 3%, with revenue per carload up 6%.
The following chart provides a detailed breakdown of revenue performance by segment:
Looking at the major business categories, Bulk revenue increased by 7% on a 5% increase in RTMs, driven by strong performance in Canadian and U.S. Grain. Merchandise revenue grew by 4% on a 2% increase in RTMs, with growth in Energy, Chemicals & Plastics, Forest Products, and Automotive offsetting weakness in Metals, Minerals & Consumer products due to softer steel demand. Intermodal revenue increased by 4% on a 4% increase in RTMs, with growth in both Domestic and International Intermodal.
Financial Performance Details
CPKC’s financial performance showed strong improvement across key metrics in Q1 2025. Operating income increased by 15% to $1,317 million, while net income attributable to controlling shareholders rose by 17% to $910 million. Core adjusted income grew by 15% to $992 million, and Core adjusted diluted EPS increased by 14% to $1.06.
The company’s operating ratio improved by 210 basis points to 65.3%, while the Core adjusted operating ratio improved by 150 basis points to 62.5%.
The following table provides a comprehensive overview of CPKC’s financial performance:
Operating expenses increased by 4.5% to $2,478 million in Q1 2025. The largest increases were in compensation and benefits, fuel, and purchased services and other. The following chart details the changes in operating expenses:
Adjusted free cash declined to $466 million in Q1 2025 from $555 million in Q1 2024, primarily due to increased capital investments. The company’s adjusted net debt to adjusted EBITDA ratio improved to 3.1 from 3.4 a year earlier.
2025 Outlook and Long-term Growth Strategy
CPKC updated its guidance for 2025, now expecting 10-14% growth in Core adjusted diluted EPS compared to the 2024 figure of $4.25. The company anticipates mid-single-digit RTM growth and has set capital expenditures at $2.9 billion for the year.
Looking beyond 2025, CPKC outlined its long-term growth strategy for 2024-2028, targeting high single-digit revenue growth and double-digit Core adjusted EPS growth. The company plans capital expenditures of $2.6 to $2.8 billion per year and expects to achieve an adjusted free cash conversion of Core adjusted income of approximately 90%. CPKC aims to return to double-digit Core adjusted ROIC and deliver strong margin improvement through cost control and operating leverage.
Sustainability Initiatives
CPKC highlighted its commitment to sustainability, noting progress on its hydrogen locomotive program and recent publication of its Climate Mileposts report in February 2025. The company also mentioned joining Clean Fuels Alliance America as part of its sustainability efforts.
This focus on sustainability aligns with the company’s long-term strategic vision and commitment to responsible business practices.
Conclusion
CPKC’s Q1 2025 results demonstrate the company’s ability to deliver strong financial and operational performance while maintaining a positive outlook for future growth. The broad-based revenue growth, improved operational efficiency, and updated guidance reflect management’s confidence in the company’s strategic direction.
With a clear long-term growth strategy and ongoing investments in network capacity and sustainability initiatives, CPKC appears well-positioned to continue delivering value for shareholders in the coming years.
Full presentation:
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