CP zeros in on C$1 billion in capex

Canadian Pacific Railway plans to spend between C$950 million and C$1.05 billion on capital projects in 2011, up measurably from the C$750 million to C$800 million it spent last year. Final capex figures for 2010 will be released at CP’s fourth-quarter/full-year 2010 earnings presentation on Jan. 26. 

CP’s 2011 capex plan includes approximately $680 million for track infrastructure renewal; $200 million for volume growth, productivity initiatives, and network enhancements; $80 million to strengthen and upgrade IT systems to enhance shipment visibility and information needs; and $40 million to address capital regulated by governments, principally Positive Train Control.

CP Chief Financial Officer Kathryn McQuade (pictured) said investments will focus on “making strategic and targeted capacity investments to ensure that the efficiencies gained through our long train strategy, repair facility, and yard consolidations are sustained as business levels return; investing in fast payback productivity and technology projects to further our lean and process re-engineering efforts, thereby further improving shipment reliability and customer service; pursuing growth and market-based opportunities, such as transload, intermodal, and energy projects that produce compelling returns; and continuing to invest in our Digital Railway technologies to lift efficiency, service, and safety to new levels.”

“CP is focused on continuously improving service reliability, asset velocity, and productivity,” McQuade said. “With strong demand projected in many of our commodity based businesses, this capital plan will enable us to meet our customer’s needs and continue to lower our operating ratio to create a stronger franchise for the future. Our first priority is to re-invest in the business, keeping our core franchise safe and well maintained. The improving economy creates opportunities to capture growth more efficiently through infrastructure and technology investments.”

Like most Class I railroads, CP typically spends between 16% to 18% of revenues on capital projects. The railroad said it expected to spend a higher percentage over the next couple of years.