Canadian Pacific Kansas City Ltd. has reined in its financial forecast for the year due to the lingering fog around U.S. tariffs and trade policy, as the railway hunts for workarounds to an array of trade barriers.
“It’s an all-out blitz, literally, to do everything we can to make our own luck as all this uncertainty unfolds on the tariff front,” said chief marketing officer John Brooks, highlighting a 60-day sales push to meet with more than 500 customers.
On the heels of a 17-per-cent year-over-year surge in profits last quarter, chief executive Keith Creel said new shipping flows between Canada and Mexico have already started to emerge from “this trade storm.”
Canadian producers are sending more refined fuels, liquefied petroleum gas, plastics and grains to Mexico, he told analysts on a conference call Wednesday.
“There’s over $100 million of new revenue that this crisis has created that originates in Alberta that goes to Mexico.”
Meanwhile, CPKC can haul more appliances, furniture, food and vehicles directly to Canada from south of the Rio Grande. Creel stressed the chance to ship more consumer products between the two countries when “the middleman is redundant.”
“A lot of these products in this case are produced in Mexico. Then they’re trucked to the United States to be packaged and labelled and warehoused, and then trucked out of the United States to go across the border onto the Canadian shelves,” he said, noting that such supply chains can inflate prices.
“That creates opportunities.”
Nonetheless, the country’s second-biggest railway faces the threat of potential economywide contraction — U.S. economic output shrank last quarter — and unpredictability around shifting tariffs.
On Thursday, CPKC lowered its financial outlook for 2025, saying it now expects adjusted diluted earnings per share to increase between 10 and 14 per cent this year, rather than 12 to 18 per cent as previously predicted.
Creel cited “increasing uncertainty created by evolving trade policies and the heightened risk of economic recession.”
In late January, the CEO had forecast “exceptional growth between the three nations” while acknowledging possible “volatility” ahead.
As the only freight railway to span all three countries in North America, CPKC has an especially keen interest in whether the White House persists with a trade war.
Brooks pointed to “choppiness” in auto shipments after U.S. President Donald Trump imposed 25 per cent tariffs on imports from Canada and Mexico. But volumes have since smoothed out, he said, with broad exemptions and rebates applicable to many carmakers.
Duties of 25 per cent for steel and aluminum imports pose another risk for carriers. But despite denting volumes into the U.S. from Canada, the move served to redirect Mexican steel product shipments to Canadian buyers, offering a partial offset, Brooks said.
Sky-high U.S. tariffs on most Chinese products have disrupted some transpacific shipments, he added. But overall cargo volumes — as measured in revenue ton miles, a key metric gauging how many tons of freight are hauled in a mile — rose or stayed flat across all categories last quarter.
On Thursday, CPKC reported first-quarter net income increased to $909 million versus $774 million the year before.
Revenues grew eight per cent to $3.80 billion in the three months ended March 31 from $3.52 billion in the same period a year earlier, the Calgary-based company said.
Diluted earnings rose to 97 cents per share from 83 cents per share, but came in below analysts’ expectations of $1.01 per share, according to financial markets firm LSEG Data & Analytics.
This report by The Canadian Press was first published April 30, 2025.
Companies in this story: (TSX:CP)
