CPKC lowers outlook amid tariff and trade uncertainty

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Canadian Pacific Kansas City Ltd. lowered its financial forecast for the year as uncertainty from tariffs and trade policy weighs on its business.

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Canada’s second-largest railway cut its earnings per share growth expectations to between 10 per cent and 14 per cent, down from its original forecast of between 12 per cent and 18 per cent. The railway’s network moves goods between Canada and Mexico, leaving it exposed to trade disruptions and other impacts from United States President Donald Trump’s tariffs.

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“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 Keith Creel said in a press release announcing the first-quarter results.

Calgary-based CPKC reported first-quarter revenues of $3.8 billion, up eight per cent from last year when revenues were $3.5 billion, partly due to a four per cent increase in freight volume.

Net income for the quarter was $909 million, an increase from $774 million a year ago.

Creel said the revenue growth could mainly be attributed to strength in CPKC’s grain business, along with coal and potash. Strength in intermodal shipping also helped, he added.

The company’s shares were up 1.3 per cent in Thursday afternoon trading.

Creel said that while he doesn’t expect a recession, the company is using uncertainty around trade and the economy to make adjustments to how it deploys workers and resources.

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“Crisis creates opportunities and that’s how we’re approaching this uncertainty around tariffs and trade policies,” he said in a call with analysts on Wednesday afternoon.

One opportunity the company is exploring is how to connect customers in Canada and Mexico as tariffs drive Canadian retailers to look beyond the U.S.

For example, Creel said products made in Mexico are often shipped to the U.S. to be packaged and labelled before being shipped to Canada to be sold. The railway is in a unique position because it can help Canadian customers cut out the U.S. middleman by shipping directly between Mexico and Canada, he said.

“Those discussions are being had,” he said.

CPKC is also working with Mexico and Canada to push policies to grow trade between the two countries, something Creel said leaders in both countries have expressed a desire to do.

“We’re playing a major role in supporting that agenda,” he said.

Additional opportunities lie in moving goods such as liquefied natural gas (LNG), plastics and fuels between Canada and Mexico, Creel said.

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Kevin Chiang, an analyst at CIBC Capital Markets, said tariffs are weighing on the company’s shares, but it is in a better position than other railways.

“We continue to see the rail outperform its peers,” he said in a note on Wednesday.

Chiang also pointed to the company’s shareholder return program as a positive. CPKC is looking to buy back up to 37 million shares to help support its share price.

The company maintains its ambitions to raise the payout ratio of its dividend towards 20 per cent to 30 per cent over time,” he said.

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