Canadian Pacific Kansas City (CP) investor relations material

Strategic progress and operational performance

• Celebrated three years since the merger, achieving unique network integration and industry-leading results despite macroeconomic headwinds.

• Revenue synergies are ahead of schedule, with CAD 1.4–1.5 billion expected by year-end, originally targeted for 2028.

• Operational efficiency and network performance have exceeded expectations, with strong grain and automotive volumes and improved train speeds.

• Technology investments, including AI and targeted slow orders, have improved safety and efficiency, especially during winter operations.

• CapEx has been reduced by 15%, with a focus on locomotive modernization and increased shareholder returns through buybacks and dividends.

Market dynamics and growth outlook

• RTMs rebounded from a 4% decline in Q1 to a 10% increase in May, driven by favorable fuel surcharges, FX moderation, and strong pricing power.

• Grain volumes are expected to remain favorable through December due to last year’s farmer behavior, while coal headwinds should normalize in the second half.

• Automotive and intermodal segments are experiencing double-digit growth, with international demand from Asia remaining robust.

• New services, such as the Southeast-Mexico Express, offer truck-competitive transit times and are positioned for further expansion.

• Macro changes in trucking, including driver shortages and rising costs, are expected to support rail growth.

Industry consolidation and regulatory environment

• Expressed strong concerns about large-scale U.S. rail mergers, citing operational risks, especially in Chicago, and the potential for industry-wide disruptions.

• Warned that approval of major mergers could trigger further consolidation, leading to a duopoly and reduced competition.

• Emphasized that enhanced competition should mean more choice for shippers, not less, and criticized proposed remedies as insufficient.

• Stressed the need for regulatory decisions on mergers and USMCA to reduce uncertainty and unlock investment.

• Industry collaboration on safety and technology continues despite competitive tensions, with renewed commitment after recent derailments.