Canadian Pacific Kansas City Ltd. cut its financial outlook for this year due to the uncertainty caused by the US administration’s tariff and trade policy.
The Calgary-based company lowered its earnings per share growth expectations to between 10% and 14% from between 12% and 18% on an adjusted diluted basis. The railway, Canada’s second largest, is highly exposed to the trade war due to its network stretching from Mexico to Canada.
“The increasing uncertainty created by evolving trade policies and the heightened risk of economic recession make it prudent to amend our 2025 earnings guidance at this time,” Chief Executive Officer Keith Creel said in a release.
CPKC’s shares dropped by more than 2% in after-hours trading in New York but then pared those losses. Revenues increased to C$3.8 billion in the first quarter, up by 7.8% from the same period last year, and adjusted diluted earnings per share rose by 14% to C$1.06. The company beat analyst estimates for both measures.
The quarter was driven by higher freight revenues from grain, coal, potash, fertilizers and automotive. Duties on steel, aluminum and imported goods that don’t comply with the North American free trade agreement were imposed during the quarter, but President Donald Trump’s global reciprocal tariffs and levies on the auto sector hadn’t yet been announced.
CPKC said it has a responsibility to help customers diversify their markets. “We stepped into this trade storm that we’re facing to become market makers,” Creel said during a call with analysts. “We’re seeing opportunities with new trade flows between Canada and Mexico.”
He expressed concerns about the automotive area, saying it “presents some risk and choppiness.”
“The steel tariffs are an area that we’re keenly focused on and working with our customers on alternatives,” Creel added. “As I look ahead as we get to new crop in the harvest in the US, we’ll certainly be watching how our soybean movements progress.”
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