10-KPeriod: FY2025

CANADIAN PACIFIC KANSAS CITY LTD/CN Annual Report, Year Ended Dec 31, 2025

Filed February 26, 2026For Securities:CP

Summary

Canadian Pacific Kansas City Ltd. (CPKC) reported solid financial results for the fiscal year 2025. Total revenues increased by 4% to $15,078 million, driven by higher freight volumes, particularly in Intermodal, Grain, Potash, Coal, and Automotive segments. Diluted earnings per share (EPS) saw a notable increase of 13% to $4.51, with core adjusted diluted EPS growing by 8% to $4.61. The company also achieved an improved operating ratio, with the reported ratio at 62.8% and the core adjusted operating ratio at 59.9%, reflecting enhanced operational efficiency. Key business developments in 2025 included the sale of the company's 50% equity investment in the Panama Canal Railway Company for $350 million, resulting in a pre-tax gain. Additionally, CPKC entered into new four-year collective agreements with its rail and train traffic controller unions, including annual wage increases. The company also announced an early renewal of its normal course issuer bid, indicating a commitment to returning capital to shareholders. CPKC's strategic focus remains on precision scheduled railroading across its five foundations: providing service, controlling costs, optimizing assets, operating safely, and developing people.

Key Highlights

  • 1Total revenues increased 4% to $15,078 million in 2025, primarily driven by higher freight volumes.
  • 2Diluted EPS rose 13% to $4.51, and core adjusted diluted EPS increased 8% to $4.61.
  • 3Operating ratio improved, with the core adjusted operating ratio standing at 59.9%.
  • 4Completed the sale of its 50% equity investment in the Panama Canal Railway Company for $350 million, recognizing a pre-tax gain.
  • 5Entered into new four-year collective agreements with key labor unions, including wage increases.
  • 6Announced a normal course issuer bid for up to approximately 44.9 million common shares for cancellation, demonstrating a commitment to shareholder returns.
  • 7The company maintained industry-leading safety performance, with a continued decrease in FRA-reportable train accident frequency.

Frequently Asked Questions

CPKC's revenue growth in 2025 was primarily driven by higher freight volumes, as measured by revenue ton-miles (RTMs). Significant contributions came from the Intermodal, Grain, Potash, Coal, and Automotive segments. Higher freight rates and favorable foreign exchange rate movements also contributed positively, though partially offset by lower fuel surcharge revenues.

CPKC improved its operating efficiency in 2025, as reflected in the lower operating ratio. The company focused on its 'precision scheduled railroading' strategy, which emphasizes controlling costs and optimizing assets. This included gains from system integration, efficient resource planning leading to a slight decrease in employee headcount, and efforts to control fuel expenses.

Key risks include competition from other transportation providers, fluctuating fuel prices, potential for labor strikes or work stoppages, cybersecurity threats, and significant governmental regulations across Canada, the U.S., and Mexico. Additionally, risks related to the integration of Kansas City Southern, environmental regulations, and potential disruptions from global economic conditions and trade policies are also noted.

CPKC demonstrated its commitment to shareholder returns through the repurchase of approximately 37.3 million common shares during 2025 and the announcement of a new normal course issuer bid for up to 44.9 million shares. The company also invested $3,102 million in capital expenditures in 2025, primarily in track and roadway, and rolling stock, to enhance efficiency and support future growth.