CANADIAN PACIFIC <CP> AIMS TO UP EQUITY RETURN
Canadian Pacific Ltd's principal aim
over the next few years will be to significantly increase the
company's return on equity, it said in the annual report.
    Canadian Pacific's return on average capital employed fell
to 4.7 pct in 1986 from 5.9 pct in the prior year. Return on
average shareholders' equity declined to 2.5 pct from 4.8 pct
in 1985.
    "To achieve this goal will require that the businesses
comprising Canadian Pacific are leaders in their respective
fields," the company said in the report to shareholders.
    "Although the steps already taken to reposition and solidify
Canadian Pacific point to a better financial performance in
1987, more remains to be accomplished if the company is to
produce returns that meet shareholder expectations," it said.
    Canadian Pacific previously reported 1986 operating net
profit fell to 150.1 mln dlrs from 252.7 mln dlrs in the prior
year. Revenues were 15.02 billion dlrs compared to 15.04
billion dlrs in 1985.
    It said emphasis will continue on reducing dependence on
cyclical industries and strengthening the asset mix.
    Canadian Pacific said 1986 results were disappointing, but
the company took several steps towards reviewing assets and
operations and rationalizing its asset base.
    As previously reported, it sold its 52.5 pct interest in
Cominco Ltd <CLT> for 472 mln dlrs in October, 1986 and
Canadian Pacific Airlines Ltd for 300 mln dlrs in January,
1987.
    Including other asset sales, Canadian Pacific's
consolidated assets fell to 17.70 billion dlrs at year end from
21.3 billion dlrs at the end of 1985, it said.
    The company also took extraordinary charges of 230.4 mln
dlrs in 1986, resulting in a loss of 80.3 mln dlrs for the
year.
    The charges consisted of a 362.5 mln dlr writedown
representing permanent impairment in asset values, partially
offset by a gain of 102.6 mln dlrs on sale of its interest in
Cominco and a gain of 29.5 mln dlrs on sale of CP Hotels'
flight kitchens.
    Canadian Pacific said a further extraordinary net gain of
172.5 mln dlrs from the airline unit sale will be included in
first quarter results.
    Canadian Pacific said despite lower earnings and
extraordinary charges, its overall cash position strengthened
in 1986 as cash generated from operations and asset sales was
more than sufficient to finance capital expenditures of 1.80
billion dlrs.
    Long term debt fell to 4.50 billion dlrs from 6.22 billion
dlrs in 1985.
    Consolidated 1987 capital spending will be reduced
considerably from 1986 levels, mainly due to the Cominco and
air line unit sales, it said. Spending commitments totalled 239
mln dlrs at the end of 1986.

The company also took extraordinary charges of 230.4 mln dlrs
in 1986, resulting in a loss of 80.3 mln dlrs for the year.
    The charges consisted of a 362.5 mln dlr writedown
representing permanent impairment in asset values, partially
offset by a gain of 102.6 mln dlrs on sale of its interest in
Cominco and a gain of 29.5 mln dlrs on sale of CP Hotels'
flight kitchens.
    Canadian Pacific said a further extraordinary net gain of
172.5 mln dlrs from the airline unit sale will be included in
first quarter results.
 Reuter
