CN Expects Better Financial Results

Canadian National is feeling more optimistic about its financial outlook after posting strong numbers for the second quarter.

The Montreal-based Class 1 railroad is looking to deliver 2018 adjusted diluted earnings per share in the range of CA$5.30 to CA$5.45, versus last year’s adjusted diluted earnings per share of CA$4.99.

This past April CN’s financial outlook called for a 2018 adjusted diluted earnings per share in the range of CA$5.10 to CA$5.25.

In the second quarter of 2018, CN said its net income rose 27 percent to CA$1.31 billion, or CA$1.77 per share, from CA$1.03 billion, or CA$1.36 per share, a year ago. Adjusted diluted earnings per share were CA$1.51, up from CA$1.34 last year.

Operating income grew 7 percent to CA$1.5 billion, while revenue rose 9 percent to CA$3.6 billion over last year’s quarter.

Operating expenses for the quarter increased 10 percent to CA$2.1 million compared with last year. CN posted an operating ratio of 58.2 percent, an increase of 0.7 points over second-quarter 2017, but an improvement of 9.6 percents over the ratio in first-quarter 2018.

In a statement, CN CEO Jean-Jacques Ruest said record capital investments in new equipment and expanded infrastructure are on schedule and CN is adding capacity.

Ruest said CN has momentum for a strong second half.

CN has increased its 2018 capital program by CA$100 million to CA$3.5 billion, with additional capital spending primarily going toward the purchase of new rail cars.

The railroad attributed its revenue increases to a higher volumes of Canadian grain, coal, overseas intermodal traffic, frac sand, refined petroleum products and U.S. grain; freight rate increases; and higher applicable fuel surcharge rates. They were partly offset by the negative translation impact of a stronger Canadian dollar.

Carloadings for the quarter climbed 6 percent to 1.5 million compared with the year-ago period.

The increase in operating expenses was mainly driven by higher fuel prices, higher labor costs and higher purchased services and material costs, CN officials said.

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