PrintS&P Revises Canadian Pacific Kansas City Outlook To Positive On Competitive Strength; BBB+ Rating Affirmed
BY MT Newswires | CORPORATE | 12/15/25 04:10 PM EST04:10 PM EST, 12/15/2025 (MT Newswires) -- S&P Global Ratings on Monday revised its outlook on freight railroad services provider Canadian Pacific Kansas City
The agency also affirmed all its ratings on CPKC and related subsidiaries, including its 'BBB+' issuer credit rating on the company.
The positive outlook reflects "our expectation for CPKC to generate mid-single-digit percent annual EBITDA growth, with a financial policy that supports adjusted funds from operations (FFO) to debt above 23%, adjusted debt to EBITDA of about 3x, and adjusted free operating cash flow (FOCF) to debt above 10%", S&P said.
"CPKC's larger network contributed to solid revenue growth over the past couple of years, which we expect will persist, particularly within the company's intermodal and automotive segments."
"The network also brings scale and diversification benefits that we think will enhance the resilience of the company's earnings and profitability," the agency added.
CPKC operates the only single-line rail network connecting Canada, the U.S., and Mexico. It launched the Mexico Midwest Express in May 2023, offering customers (including Americold and Schneider National) a truck-competitive single-line rail service option between the U.S. Midwest and Mexico.
However, the ratings agency noted that CPKC's business is also exposed to tariffs as it derives about 40% of its revenue from goods crossing the Canada-U.S. or Mexico-U.S. borders.
As of Dec. 6, CPKC's year-to-date revenue ton miles (a measure of freight volume that incorporates tonnage and length of haul) were up about 5%.
"The growth this year in the face of economic and trade policy uncertainty stems largely from CPKC unlocking revenue opportunities following its merger with KCS. We expect these opportunities will continue to drive above industry average revenue and earnings growth over the next few years and support robust FOCF generation," S&P said.
"Combined with capital expenditure of 18%-19% of revenue per year, we estimate CPKC will generate annual FOCF of C$3.0 billion-C$3.5 billion, or 10%-15% of debt over the next few years," it added.
Shares of the company closed down $0.89 to $102.47 on the Toronto Stock Exchange.
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