Canadian Pacific Kansas City (NYSE:CP) reported fourth-quarter revenue of CAD 3.9 billion, up 1% year-over-year, as management emphasized cost control and operating execution amid demand softness in several markets. The railroad posted a core adjusted operating ratio (OR) of 55.9%, an improvement of 120 basis points, and core adjusted diluted earnings per share (EPS) of CAD 1.33, up 3% from the prior year.
For the full year 2025, CPKC said revenue rose 4% to CAD 15.1 billion on 4% volume growth, while core adjusted OR improved 140 basis points to an “industry best” 59.9%. Core adjusted diluted EPS increased 8.8% to CAD 4.61.
2026 outlook: mid-single-digit volume growth and low double-digit earnings growth
Creel and other executives pointed to an “all-time record” Canadian grain harvest estimate of 85 million metric tons, compared with a prior record of 78 million, as a key contributor to 2026 volume expectations. The company also highlighted continued growth in intermodal service offerings, including its Midwest-to-Mexico MMX product and a developing Southeast-to-Mexico intermodal product with CSX.
On capital allocation, the company announced a new 5% share repurchase program for 2026 after completing a 37 million share repurchase program in late October 2025. Management also said CPKC is adding 100 new locomotives in 2026, in addition to the 100 added in 2025.
Operating performance and safety metrics
Chief Operating Officer Mark Redd said the network achieved record quarterly results across multiple metrics including train weight, train speed, locomotive productivity, and car velocity. Redd also noted that CPKC earned Amtrak’s Best Carrier designation for the 10th consecutive year with an A-plus performance, calling it the only railroad with that distinction.
Redd compared 2025 operational performance with 2023, the time of the merger, saying the combined network is 13% faster, locomotives are 13% more productive, and car velocity is nearly 14% stronger. He said the improvement south of Kansas City was even more pronounced, with 2025 speeds over 25% better and locomotive productivity roughly 20% higher.
On safety, Redd reported fourth-quarter FRA train accident frequency of 0.91, 12% better, while FRA personal injuries were 1.05, a 22% increase. For the full year, FRA train accident frequency was 0.85, 16% better, and personal injuries were 0.92, 3% better. He said CPKC has led the Class I railroads in lowest FRA reportable train accident frequency for the third straight year, extending CP’s legacy of 17 consecutive years.
Market and segment performance: grain strength offsets softness elsewhere
Chief Marketing Officer John Brooks said the quarter demonstrated “resilience” across the book of business, with new wins and growth in key segments offsetting areas of “deepening softness.” He said Q4 revenue was up 1% on flat revenue ton-miles (RTMs), with cents per RTM up 1%, and noted renewals exceeded the company’s long-term 3% to 4% pricing outlook. Brooks added that mix partially offset pricing, as longer length of haul and higher bulk traffic lowered cents per RTM.
- Grain: Record grain revenues rose 4% on 2% volume growth. Brooks said Canadian export volumes lagged expectations due to rain impacting vessel loading in Vancouver and farmers storing grain, slowing shipments. He also cited record Q4 and full-year grain shipments into Mexico.
- Potash: Revenues fell 2% on 2% volume growth, which Brooks attributed to higher export volumes through Vancouver. He said Canpotex was “fully committed through the first quarter” and expects potash to remain a solid contributor.
- Coal: Revenue increased 2% despite a 1% volume decline, as lower Canadian coal volumes were partially offset by higher U.S. thermal coal volumes.
- Energy, chemicals, and plastics: Revenue declined 3% on a 5% volume decrease, driven by lower crude and refined fuel volumes to Mexico and softer plastics demand. Brooks said LPG shipments from Canada to Mexico grew.
- Forest products: Revenue dropped 13% on a 12% volume decline, pressured by tariffs on Canadian lumber exports to the U.S. and macro softness in pulp and paper.
- Metals, minerals, and consumer products: Revenue and volume rose 1%, with strength from cement and aggregates for construction projects, partially offset by tariff impacts on cross-border steel.
- Automotive: Revenue was down 3% on 1% volume growth. Brooks cited production slowdowns, aluminum supply challenges, and a chip shortage that he said created a CAD 30 million revenue headwind in the quarter.
- Intermodal: Revenue rose 3% on 4% volume growth. International volumes increased 5% on growth with ocean carrier partners and easier comparisons after last year’s labor disruption at the Port of Vancouver. Domestic intermodal volumes grew 3%, and Brooks said MMX volumes were up about 40% year-over-year.
Financial details: expenses, tax rate, cash flow, and 2026 capex reduction
Chief Financial Officer Nadeem Velani said the company’s cost controls and PSR-driven execution helped offset temporary demand softness. For Q4, CPKC’s reported OR was 58.9%, while core adjusted OR improved to 55.9%. For the full year, reported OR was 62.8% and core adjusted OR improved to 59.9%.
Velani discussed key expense items on an FX-adjusted basis, including flat compensation and benefits excluding adjustments, fuel expense down 8% year-over-year (citing the elimination of the Canadian federal carbon tax on April 1 and improved efficiency), equipment rents up 4% driven by higher intermodal car hire, depreciation and amortization up 7% due to a larger asset base, and purchased services and other expenses down year-over-year due to productivity and insourcing initiatives.
For cash flow, Velani said 2025 net cash from operating activities increased 1% to CAD 5.3 billion. Capital expenditures totaled CAD 3.1 billion, above the CAD 2.9 billion outlook due to pulled-forward maintenance projects. For 2026, CPKC reduced its capital outlook by 15% to CAD 2.65 billion, with Velani attributing the shift to timing and a reduction in certain infrastructure, systems integration, and railcar-related spending.
Velani also said the core adjusted effective tax rate was about 25% in Q4, creating a CAD 40 million headwind versus Q4 2024, and the company expects a 2026 core adjusted effective tax rate of approximately 24.75%.
Q&A: volume confidence, policy issues, and merger commentary
During Q&A, management acknowledged a tougher first quarter due to difficult comparisons and a recent weather event, with Velani calling Q1 “the toughest quarter of the year” but stating it should not be “a hockey stick.” Executives pointed to grain and potash plans, continued MMX growth, the upcoming SMX launch with CSX, and a ramp in Americold-related refrigerated business as factors supporting the mid-single-digit RTM growth outlook. Management also said it expects year-over-year OR improvement in Q1 and annually.
On reciprocal switching proposals, Creel said he did not see it as a threat to CPKC, adding that if a customer cannot get service, they should have an alternative, but the proposal should be “fair” and consider unintended consequences.
Creel also addressed the rejected Union Pacific-Norfolk Southern application, stressing the need for a fact-based review and saying the burden of proof is higher under current rules, with a public interest test that requires the “benefits box” to be “fuller than the harm box.”
On USMCA, Creel said CPKC has already absorbed a significant revenue impact from uncertainty—around CAD 200 million, and possibly higher—while expressing confidence that trilateral trade will continue. He said his view is that renegotiations could become more active in the summer.
About Canadian Pacific Kansas City (NYSE:CP)
Canadian Pacific Kansas City (CPKC) is a North American Class I freight railroad formed through the combination of Canadian Pacific Railway and Kansas City Southern. The merged company operates an integrated rail network that spans Canada, the United States and Mexico, providing a single-line rail connection across all three countries. This transborder footprint is intended to streamline cross-border freight flows and provide shippers with direct rail access from Canadian and U.S. production centers to Mexican markets and ports.
CPKC’s core business is freight transportation and related logistics services.
