CALGARY, ALBERTA, CANADA — Canadian Pacific Kansas City Ltd. (CPKC), a major shipper of grain throughout North America, on April 24 posted first-quarter revenues of C$3.52 billion ($2.56 billion) for the three months ended March 31, up 55% from C$2.27 billion during the same period a year ago.

Net income in the first quarter for railroad, which marked the first anniversary of the merger of Canadian Pacific (CP) and Kansas City Southern (KCS) on April 14, dipped to C$774 million from C$800 million a year ago, challenged by higher operating expenses. Volumes, as measured in revenue ton-miles, increased 1% on a combined basis.

“One year into our historic combination, I am proud of what our dedicated family of railroaders has accomplished as we deliver on the benefits of our unrivalled network — spurring competition, increasing safety and connecting more markets for our customers,” said Keith Creel, president and chief executive officer. “Today’s results show the success of our efforts to drive growth as the only railway connecting Canada, the United States and Mexico.”

Grain, the largest segment, powered results with C$730 million in revenue for the first quarter, up 42% from C$515 million a year ago. CPKC recorded 132,300 carloads of grain, up 26% from 104,800. US grain volumes grew 19% year-on-year, compensating for Canadian volumes that were down 15%.

“Volumes (in Canada) decreased as a result of a weaker 2023 harvest in our draw territory,” said John Kenneth Brooks, executive vice president and chief marketing officer, in a conference call with analysts.  “However, they still came in better than anticipated as on-farm supplies remain stronger given softer shipping in the fall peak. So while we may see better-than-expected volumes this summer, we still expect overall year-over-year compares in Canadian grain to be a headwind until we get to the new crop.

“Our franchise is benefiting from strong export corn shipments to the P&W and Alberta, along with more shipments of wheat and soybeans to Mexico, which is a new area of growth for CPKC.”

Looking ahead, Brooks noted the grain business has improved during the past 30 days, though with seeding in Canada beginning in May, the company expects that volume decline in the near term.

“I just met with all the grain companies the last couple of weeks, and they’re pretty optimistic that we might see, particularly if we get some rains here in May and early June, that we might actually see a pretty decent push this summer,” Brooks said. “So we’re watching that closely, and certainly, that could provide some upside there.” 

The results of Kansas City Southern (KCS) are included on a consolidated basis from April 14, 2023, the date CP acquired control. From Dec. 14, 2021, to April 13, 2023, CP recorded its interest in KCS under the equity method of accounting.