Canadian Pacific Kansas City Reaffirms Growth Outlook, Targets $1.5B in Merger Synergies

Canadian Pacific Kansas City Reaffirmed its full-year outlook for mid-single-digit revenue ton-mile growth and low-double-digit earnings growth, with RTMs up about 4% year to date and nearly 7% quarter to date. The railroad expects to exit the year with approximately CAD 1.5 billion in merger-related revenue synergies, driven by growing U.S.-Mexico trade, cross-border intermodal, grain and cold-storage services. CPKC lowered its 2025 capital-spending guidance by about 15% to roughly CAD 2.6 billion, a level management believes can improve free-cash-flow conversion while supporting share repurchases and dividends.

Canadian Pacific Kansas City NYSE: CP President and CEO Keith Creel said the railroad remains positioned to meet its full-year growth and earnings outlook despite a challenging freight environment, trade uncertainty and commodity-specific headwinds. Speaking at the 14th Annual Laguna Conference, Creel said CPKC had targeted mid-single-digit revenue ton-mile, or RTM, growth for the year, supporting low-double-digit earnings growth. RTMs were up about 4% year to date and were approaching 7% quarter to date, he said, citing continued strength in grain and intermodal traffic as well as moderating coal-related headwinds.

Creel said uncertainty surrounding tariffs and trade arrangements has limited some of the investment benefits that typically accompany greater policy certainty. However, he said manufacturing investment, data-center development and trade activity continue across the U.S., Canada and Mexico. He said a resolution to the U.S.-Mexico-Canada Agreement review process could provide further support, though he was more confident about the U.S.-Mexico relationship than the timing of a broader resolution involving Canada. Creel also pointed to potential Canadian tax, labor and infrastructure reforms as developments that could improve the country’s competitiveness and support freight volumes. He said investments in ports, rail infrastructure and other trade-enabling assets could benefit CPKC because its network connects Canada, the U.S. and Mexico.

On nearshoring and manufacturing shifts, Creel said recently announced production changes appear favorable to CPKC’s network. While some original equipment manufacturers may move production from Mexico to the U.S., he said the company’s served facilities are expected to see increased production in certain cases. CPKC’s grain business has also become more resilient through network expansion and diversification, according to Creel. He said the railroad has increased train lengths, expanded elevator capacity and benefited from additional export capacity on Canada’s West Coast. The company can also move Canadian grain into Mexico and U.S. Midwest products into Canada when conditions warrant, he said.

Creel said the company is ahead of where it expected to be following the CPKC combination, despite what he described as a multiyear freight recession. While crude-oil opportunities have not developed as anticipated, transborder trade between the U.S. and Mexico has exceeded expectations, he said. Creel said Canada-Mexico land-bridge revenue has grown from roughly CAD 100 million when the railroads were combined to more than CAD 600 million, with a goal of reaching ...