CN 1st Quarter Revenue Flat

Canadian National this week said its first quarter 2020 revenue was flat at CA$3.5 billion compared with the year-ago period.

Diluted earnings per share (EPS) rose 31 percent to CA$1.42, while adjusted diluted EPS increased 4 percent to CA$1.22, compared with the first quarter of 2019.

CN posted an operating ratio of 65.7 percent, an improvement of 3.8 points or 1.5 points on an adjusted basis, during the quarter.

Operating income increased 13 percent, or 4 percent on an adjusted basis, to CA$1.2 billion versus the year-ago period.

Operating expenses for the quarter decreased 5 percent to CA$2.3 billion, driven mainly by lower labor costs, depreciation expense and fuel expense.

In April CN’s traffic fell 15 percent led buy a nearly 90 percent drop in automotive volume due to the closure of North American assembly plants during the COVID-19 pandemic.

CN expects traffic to bottom out in May. In the meantime it has stored 500 locomotives and 15 percent of its freight car fleet.

It has suspended operations in yards in Battle Creek, Mich.; Jackson, Mississippi.; Garneau, Quebec; and Kamloops, British Columbia, and reduced mechanical shop activity at more than 20 locations across the system.

“I am very proud of how we recovered quickly in March from the service disruptions in February,” said CN President and Chief Executive Officer JJ Ruest in a statement.

“Our network is very fluid, and we are continuing the temporary right-sizing of our resources to match the weaker demand caused by the global recession. We are committed to providing long-term shareholder value by delivering on our strategic capacity investments for growth and by deploying technological innovations.”

In a news release, CN attributed its flat revenue during the first quarter in part to the impact the blockades and pandemic had on volume.

The pandemic led CN to revise its 2020 financial outlook, saying the demand for transportation services are correlated with the duration of containment measures and their effect on businesses and consumers, which remain uncertain.

CN has reduced 2020 capital expenditures by CA$200 million to CA$2.9 billion, but will spend CA$1.6 billion on track maintenance this year.

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